THOROUGHBRED HORSE RACING JOCKEYS AND

WORKERS: EXAMINING ON-TRACK INJURY INSURANCE AND OTHER HEALTH AND WELFARE

ISSUES

HEARING

BEFORE THE

SUBCOMMITTEE ON

OVERSIGHT AND INVESTIGATIONS

OF THE

COMMITTEE ON ENERGY AND

COMMERCE

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

OCTOBER 18, 2005

Serial No. 109–34

Printed for the use of the Committee on Energy and Commerce

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Available via the World Wide Web: http://www.access.gpo.gov/congress/house

THOROUGHBRED HORSE RACING JOCKEYS AND WORKERS: EXAMINING ON-TRACK

INJURY INSURANCE AND OTHER HEALTH AND WELFARE ISSUES

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THOROUGHBRED HORSE RACING JOCKEYS AND

WORKERS: EXAMINING ON-TRACK INJURY INSURANCE AND OTHER HEALTH AND WELFARE

ISSUES

HEARING

BEFORE THE

SUBCOMMITTEE ON

OVERSIGHT AND INVESTIGATIONS

OF THE

COMMITTEE ON ENERGY AND

COMMERCE

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

OCTOBER 18, 2005

Serial No. 109–34

Printed for the use of the Committee on Energy and Commerce

(

Available via the World Wide Web: http://www.access.gpo.gov/congress/house

COMMITTEE ON ENERGY AND COMMERCE

JOE BARTON, Texas, Chairman

RALPH M. HALL, Texas

MICHAEL BILIRAKIS, Florida

Vice Chairman

FRED UPTON, Michigan

CLIFF STEARNS, Florida

PAUL E. GILLMOR, Ohio

NATHAN DEAL, Georgia

ED WHITFIELD, Kentucky

CHARLIE NORWOOD, Georgia

BARBARA CUBIN, Wyoming

JOHN SHIMKUS, Illinois

HEATHER WILSON, New Mexico

JOHN B. SHADEGG, Arizona

CHARLES W. ‘‘CHIP’’ PICKERING,

Mississippi, Vice Chairman

VITO FOSSELLA, New York

ROY BLUNT, Missouri

STEVE BUYER, Indiana

GEORGE RADANOVICH, California

CHARLES F. BASS, New Hampshire

JOSEPH R. PITTS, Pennsylvania

MARY BONO, California

GREG WALDEN, Oregon

LEE TERRY, Nebraska

MIKE FERGUSON, New Jersey

MIKE ROGERS, Michigan

C.L. ‘‘BUTCH’’ OTTER, Idaho

SUE MYRICK, North Carolina

JOHN SULLIVAN, Oklahoma

TIM MURPHY, Pennsylvania

MICHAEL C. BURGESS, Texas

MARSHA BLACKBURN, Tennessee

JOHN D. DINGELL, Michigan

Ranking Member

HENRY A. WAXMAN, California

EDWARD J. MARKEY, Massachusetts

RICK BOUCHER, Virginia

EDOLPHUS TOWNS, New York

FRANK PALLONE, Jr., New Jersey

SHERROD BROWN, Ohio

BART GORDON, Tennessee

BOBBY L. RUSH, Illinois

ANNA G. ESHOO, California

BART STUPAK, Michigan

ELIOT L. ENGEL, New York

ALBERT R. WYNN, Maryland

GENE GREEN, Texas

TED STRICKLAND, Ohio

DIANA DEGETTE, Colorado

LOIS CAPPS, California

MIKE DOYLE, Pennsylvania

TOM ALLEN, Maine

JIM DAVIS, Florida

JAN SCHAKOWSKY, Illinois

HILDA L. SOLIS, California

CHARLES A. GONZALEZ, Texas

JAY INSLEE, Washington

TAMMY BALDWIN, Wisconsin

MIKE ROSS, Arkansas

BUD ALBRIGHT, Staff Director

DAVID CAVICKE, Deputy Staff Director and General Counsel

REID P.F. STUNTZ, Minority Staff Director and Chief Counsel

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

ED WHITFIELD, Kentucky, Chairman

CLIFF STEARNS, Florida

CHARLES W. ‘‘CHIP’’ PICKERING,

Mississippi

CHARLES F. BASS, New Hampshire

GREG WALDEN, Oregon

MIKE FERGUSON, New Jersey

MICHAEL C. BURGESS, Texas

MARSHA BLACKBURN, Tennessee

JOE BARTON, Texas,

(Ex Officio)

BART STUPAK, Michigan

Ranking Member

DIANA DEGETTE, Colorado

JAN SCHAKOWSKY, Illinois

JAY INSLEE, Washington

TAMMY BALDWIN, Wisconsin

HENRY A. WAXMAN, California

JOHN D. DINGELL, Michigan,

(Ex Officio)

(II)

C O N T E N T S

Page

Testimony of:

Bailey, Jerry, Professional Jockey, Member, Racing Hall of Fame, former

President, Jockeys’ Guild ............................................................................. 45

Birzer, Gary, former professional jockey, accompanied by Amy Birzer,

Paul Koczkur, Attorney, and Dane Lupo, Attorney ................................... 12

Colton, Robert, professional exercise rider, former professional jockey,

former Member, Board of Directors, Jockeys’ Guild .................................. 87

Day, Pat, former professional jockey, Member, Racing Hall of Fame,

former President, Jockeys’ Guild ................................................................. 55

Donahue, Gary, former professional jockey .................................................... 63

Fiss, Albert, Vice President and Chief Operating Officer, Jockeys’ Guild ... 175

Gertmenian, L. Wayne, President and Chief Executive Officer, Jockeys’

Guild .............................................................................................................. 173

Giovanni, John, former professional jockey, former National Manager,

Jockeys’ Guild ................................................................................................ 50

King, Edwin L., professional jockey, former Treasurer, Jockeys’ Guild ...... 56

McCarron, Chris, former professional jockey, Member, Racing Hall of

Fame, former Member, Board of Directors, Jockeys’ Guild ....................... 139

Ownbey, Lloyd, General Counsel, Jockeys’ Guild .......................................... 187

Shepherd, David, professional jockey, Chairman, Board of Directors, Jockeys’ Guild ....................................................................................................... 67

Swan, Tomey-Jean, professional jockey, Co-Vice Chairman, Board of Directors, Jockeys’ Guild .................................................................................. 65

(III)

(1)

THOROUGHBRED HORSE RACING JOCKEYS

AND WORKERS: EXAMINING ON-TRACK INJURY INSURANCE AND OTHER HEALTH AND

WELFARE ISSUES

TUESDAY, OCTOBER 18, 2005

HOUSE OF REPRESENTATIVES,

COMMITTEE ON ENERGY AND COMMERCE,

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS,

Washington, DC.

The subcommittee met, pursuant to notice, at 11:05 a.m., in room

2123, Rayburn House Office Building, Hon. Ed Whitfield (chairman) presiding.

Members present: Representatives Whitfield, Stearns, Bass, Walden, Burgess, Blackburn, Barton (ex officio), Stupak, Schakowsky,

Inslee, and Baldwin.

Staff present: Mark Paoletta, chief counsel; Tony Cooke, majority

counsel; Tom Feddo, majority counsel; Kelli Andrews, majority

counsel; Alan Slobodin, majority counsel; Peter Spencer, professional staff member; Clayton Matheson, research analyst; Terry

Lane, deputy communications director; Jonathan Pettibon, clerk;

Michael Abraham, clerk; David Nelson, minority counsel; and Elizabeth Ertel, research assistant.

Mr. WHITFIELD. This hearing will come to order. I’m sorry, we’re

a few minutes late, but we had some last minute issues that came

up and—but I do want to welcome you to this hearing on ‘‘Horse

Racing Jockeys and Workers: Examining On-track Injury Insurance and Other Health and Welfare Issues.’’ We’re going to have

three panels of witnesses today. The first panel, we have Mr. Gary

Birzer, who’s a professional jockey, and his wife Amy Birzer, and

so we look forward to their testimony.

And before we get to their testimony, of course we will have our

opening statements. And I might add that as is the custom of the

Oversight and Investigations Subcommittee, we take all of our testimony under oath. And every witness is entitled to have an attorney represent them as they give their testimony and before we get

to every witness, we’ll certainly be swearing them in and walking

them through the process. But at this time, I do want to welcome

all of you once again for being with us today. I know many of you

came from long distances and we appreciate very much your taking

the time to be here on what we consider to be a particularly important issue.

This issue came about and came to my attention and the attention of most people that follow the industry as a result of a July

2

20, 2004 accident during the seventh race at Mountaineer Park

Race Track in West Virginia when jockey Gary Birzer broke his

back in a fall and became permanently disabled. When he turned

to the organization that he believed was providing the catastrophic

insurance coverage, he discovered that he and other jockeys had no

coverage, even though they had paid the fees, they paid their dues

to that organization. The policy had actually been allowed to lapse

2 years earlier.

Gary’s story dramatically brings to light a very serious problem

confronting the entire horse racing industry, and that is the need

for adequate on-track insurance coverage for jockeys, for exercise

riders, and other workers on the backside. In today’s hearing, we’ll

shine a light on this problem, and as a first step in determining

whether and how the Congress can help provide a solution.

I might also say that there is little real Federal oversight or regulation of the horse racing industry. And today’s horse racing in

the United States is a highly fragmented industry with a lot of different jurisdictions. It does have a total economic impact of $26 billion annually and that supports hundreds of thousands of jobs, and

there is a racing handle of over $16 billion each year. But it still

does not provide adequate on-track injury insurance for some of the

industry’s most important people and that is the jockeys.

Now today’s hearing has been made by some of the witnesses,

particularly relating to the Jockeys Guild, they tried to make this

a rather controversial hearing, and there is no reason for this to

be a controversial hearing, but there are some serious issues that

we’re going to be looking into.

No. 1, we’re going to look into the lapse of the policy and we’re

going to try to find out did the Board of the Guild or the appropriate body of the Guild make a rational and valid and legal decision on allowing it to lapse? No. 2, did the Guild give adequate and

legal notice to jockeys who paid dues with the full expectation that

they would be covered with insurance for catastrophic coverage?

Did the Guild give them adequate notice so that they did know?

No. 3, there’s a fund called the Disabled Jockeys Fund, and I think

Mr. John Giovanni started that fund when he was the head of the

Jockeys Guild, and at one point, there’s $1.3, $1.4 million in that

fund. And from that fund, the Jockeys Guild made payments to

permanently disabled jockeys from time to time as the need occurred.

And under the current leadership of Dr. Gertmenian and others

at the Guild, we know that the Disabled Jockeys Fund is being depleted and there has been testimony that we’ve heard and we’ve

read in the testimony that over a million dollars was taken out of

that fund, was asked to be moved because ‘‘we’’ want to leave the

impression that this fund does not have adequate resources so that

we can get more money. So those allegations have been made.

And then we know that when Mr. Giovanni was in charge of the

Disabled Jockeys Fund and his leadership, that payments to the

jockeys were made from the Fund. Checks were made from that

fund to the jockeys. But under Dr. Gertmenian, it appears that the

Disabled Jockeys Fund is making payments to the Guild and then

the Guild is writing checks. And of course, we’ve asked for and subpoenaed those documents to get a better understanding of the way

3

that’s been working and at this time, we’ve not received complete

information.

Another issue relates to Dr. Gertmenian himself. There’s some

testimony, and this is not a court of law, but it is a fact-finding

body, that Dr. Gertmenian has a tendency to exaggerate, to embellish and sometimes that contributes to an overall perception problem. For example, in his resume he talks about being a chief detente negotiator in Moscow for the National Security Council, and

yet we’ve talked to people who have been at the National Security

Council during the period that Dr. Gertmenian refers to in his

Pepperdine University resume of 1974, 1975 and 1976.

We’ve talked to many people who have been there during that

period, in fact, from 1972 through 1984, and they never heard of

Dr. Gertmenian. So those are some issues that we look forward to

looking at as well.

And then finally, what is the solution to this, how do we come

up with a solution? We know that this committee has jurisdiction

over professional sports. It was this committee that passed the first

Interstate Horseracing Act that set up the infrastructure or the

structure for simulcasting. So do we need a Federal solution? Is

this something that is so difficult because of the fragmented industry and the different jurisdictions and something so important as

health care for a sport that is so dangerous? Do we need to take

some additional steps?

So that’s another purpose of this hearing. And with that, I will

at this time recognize the gentleman from Michigan for his opening

statement.

[The prepared statement of Hon. Ed Whitfield follows:]

PREPARED STATEMENT OF HON. ED WHITFIELD, CHAIRMAN, SUBCOMMITTEE ON

OVERSIGHT AND INVESTIGATIONS

Good morning and welcome. Today, the Oversight and Investigations Subcommittee will examine a serious health and welfare matter affecting a national

sport and interstate commerce. This issue involves a recent tragic story of a professional athlete in an extremely dangerous sport. On July 20, 2004, during the seventh race at Mountaineer Park racetrack, in West Virginia, jockey Gary Birzer

broke his back in a fall and became permanently disabled. When he turned to the

organization that he believed was providing his catastrophic insurance coverage, he

discovered that he and other jockeys had no coverage. The policy had been allowed

to lapse two years earlier. Gary’s story dramatically brings to light a very serious

problem confronting the horse racing industry—the need for adequate on-track injury insurance for jockeys, exercise riders, and other workers on the backside. Today’s hearing will shine a light on this problem and is a first step in determining

whether and how the Congress can help provide a solution.

Because of the dangerous nature of horse racing, serious injuries are common

among the people who race, ride, or care for these massive and powerful animals.

Unfortunately, the various states’ workers’ compensation programs do not cover

many workers in the horse racing industry. Given the nature of these jobs—jockeys

and exercise riders, especially—the law has historically considered them to be independent contractors. Only four of 38 racing jurisdictions—Maryland, New York,

California, and New Jersey—have attempted to address this problem by creating

special workers’ compensation funds for jockeys and exercise riders. Some, like New

York, have been more successful than others in addressing the problem.

Additionally, there is little real federal oversight or regulation of the horse racing

industry. Thus, today horse racing in the United States is a highly fragmented industry generating a total economic impact of $26 billion annually, that supports

hundreds of thousands of jobs and sees a racing ‘‘handle’’ of $16 billion each year,

but does not provide adequate on-track injury insurance for some of the industry’s

most important people. Let me be clear—without the jockeys and backside workers,

there would be no horse racing. All of those other jobs would not exist.

4

Let me also make clear: the primary purpose of this hearing is to address the

health and welfare issues of jockeys and other workers most susceptible to serious

injury in this industry. I am interested in learning whether the federal government

can make a difference in the public health issues that these workers face, and

whether we need to consider some sort of national governing body to oversee the

professional sport of horse racing. In pursuit of these concerns, we are planning a

second day of this hearing in early November to take testimony from the Thoroughbred Racing Association, Churchill Downs, Mountaineer Park, and some of the industry’s health and welfare organizations. These organizations have already been

invited and confirmed their participation. We will have tough and pointed questions

for them as well. All of these players in the industry share in the responsibility for

taking care of these individuals.

Today we will examine the adequacy of on-track injury insurance and whether a

federal solution could be helpful. Such an inquiry entails focusing on the vital role

that the Guild has historically played in ensuring that its members had adequate

on-track injury insurance. The Guild is an association that has sought to promote

the health and welfare of its members since the 1940s. In recent times, the Guild

secured on-track insurance coverage through membership dues received from its

members—‘‘mount fees’’—as well as payments totaling millions of dollars from many

racetracks around the country in consideration for the use of Guild members’ media

rights. The Guild’s on-track injury insurance covered jockeys when they weren’t

riding in the states that had workers’ compensation programs. The policy provided

$1 million dollars in coverage per accident.

In April 2002, however, when the policy came up for renewal, the Guild chose not

to renew it. I have many questions: who made this decision? for what reason? were

members adequately notified? Since the Birzer accident, the Guild has frequently

told its members, the press, and this Subcommittee that the Guild could not afford

the policy, and that the policy did not cover all jockeys. When staff interviewed Dr.

Gertmenian, he also stated that the Guild could not afford the policy. But when

staff interviewed the Guild’s Vice President, Albert Fiss, he admitted that the Guild

could have afforded to renew the policy, but that the decision to let the insurance

lapse was a ‘‘business decision.’’ This past May, in another letter to the Subcommittee, the Guild’s general counsel, Mr. Lloyd Ownbey, stated that ‘‘the Board

and Dr. Gertmenian agreed there was no justification to buy a new policy after it

expired when the Guild and its jockeys had more important needs.’’ What could

have been more important than maintaining insurance for its members in the event

of a catastrophic injury?

The Guild has provided sworn answers in federal litigation stating that the Board

made the decision to let the policy lapse. Likewise, in an April 2005 letter to this

Subcommittee, Mr. Ownbey stated ‘‘the Board of the Guild voted not to renew that

insurance policy in April 2002 on the recommendation of Dr. Gertmenian. The decision to let it lapse [was] communicated to Guild members.’’ However, in an article

published just last Friday in BusinessWeek Dr. Gertmenian apparently admits

there was no formal notification about the policy lapse.

With respect to the Board having made this decision, our work indicates otherwise—that is, the Board was apparently never involved. In fact, three members of

that former Board are here today, and I will ask them to testify about this and

other issues.

What we do know at this point, is that the policy was allowed to lapse. Many jockeys interviewed by staff have said they were never notified of this decision. Some

of these riders risk their lives in competitive races nearly 2000 times a year. And

yet, these jockeys have told us they only learned of the lapsed insurance policy after

Gary Birzer’s tragic accident. We will hear very moving testimony from Gary and

his wife, Amy, today on our first panel.

I find the treatment of the Birzers particularly reprehensible. They asked for the

Guild’s assistance with their medical bills, counting on the insurance for which Gary

thought his dues to the Guild had been paying. Not only were they shocked to learn

that the Guild no longer had the policy, but that, in the words of Albert Fiss, Gary

was being used as a ‘‘guinea pig’’ to make a statement to the industry. The Guild

management insists that on-track insurance is the exclusive responsibility of the

racetracks.

While I intend to find a solution to this problem, and to hold the racetracks accountable, the immediate issue is here, with the Guild’s responsibilities. There is

no excuse for this profound breach of trust by the Guild. It had a responsibility to

its members—to promote their health and welfare. Instead, the Guild removed an

injury insurance policy, without any replacement, and with full knowledge of the

risks taken thousands of times each year by jockeys. I am appalled that their leadVerDate 11-MAY-2000 09:27 Nov 28, 2005 Jkt 000000 PO 00000 Frm 00012 Fmt 6633 Sfmt 6621 24255.TXT HCOM1 PsN: HCOM1
5

ership would consider the removal of their on-track insurance, without an adequate

replacement, to be a simple business decision.

Our second panel of witnesses will provide the opportunity for us to hear, first

hand, what several jockeys—including several who are currently members of the

Racing Hall of Fame—think of that decision. They will also testify about the dangers of their sport, the safety and health concerns that they have, and their involvement with the Jockeys’ Guild—both the current and previous administrations. Their

testimony will be invaluable as we examine the public health issues that this professional sport faces.

Finally, today we will hear from the Guild’s current management—Dr.

Gertmenian and Mr. Fiss—as well as the Guild’s general counsel, Mr. Ownbey.

Since we began this investigation the Guild has failed to produce records and information in response to a lawful congressional request. In fact, this Subcommittee

earlier this month authorized the issuance of subpoenas for records, and it is not

altogether clear that the Guild has been fully responsive. We expect some clear answers today, about the failure to produce records in accordance with the subpoenas.

With regard to Dr. Gertmenian, there are several areas of interest that I want

to explore today. First, I want to discuss the Guild’s treatment of the Birzers after

Gary’s injury. Second, I would like some answers about the circumstances surrounding the lapse in the on-track insurance policy. Next, I think the public, and

especially the jockeys, deserve some answers about your company, Matrix. No one

the staff has interviewed, including yourself, has been able to describe what Matrix

does for the Guild or has accomplished for the Guild, to earn its $400,000 in annual

fees. In a review of those fees, one sees that the Guild pays you $175,000 in salary,

$7200 for a car, and $12,000 for life insurance, on top of the $400,000 to Matrix,

a company you run out of your home, and that has no employees. Records produced

in response to our subpoenas show that your daughter and her marketing firm are

frequent recipients of substantial payments from Matrix.

Fourth, we need answers to certain questions about your resume. The jockeys

chose to replace Mr. Giovanni, a former jockey, because they thought they were getting an experienced businessman and prominent government leader. I am not so

sure that is the case. Fifth, and finally, the Subcommittee expects answers from you

about the Disabled Jockeys Fund, and why it has been completely depleted of the

$1.3 million it had when you took over the Guild.

Let me extend my appreciation to all of you for appearing here today. I’d like especially to thank Gary and Amy Birzer, and Gary Donahue for their participation.

Given your perspective about the needs for adequate coverage and the other pressing health and safety needs in the industry, I think your testimony today will be

most useful.

I look forward to all your testimony and now turn to the distinguished Ranking

Member, Mr. Stupak, for the purposes of an opening statement.

Mr. STUPAK. Thank you, Mr. Chairman, and thank you for convening this hearing. Today, we’re going to hear a story of neglect,

failure and betrayal. I’m, for one, outraged that the jockeys, exercise riders and grooms that make thoroughbred racing the sport

that it is could face conditions in the 21st century that most American workers have not experienced within their working lives, or

their parents’ working lives for that matter. The most disturbing

aspect of what we will hear today concerns the failure of the Government, State and Federal, to provide fundamental legal protections to these workers which are enjoyed by their fellow citizens.

Of the 38 States that permit thoroughbred racing, only four, New

York, California, New Jersey and Maryland, require that the owners and operators of race tracks provide workers compensation insurance for jockeys and freelance exercise riders.

Some States do not even require that riders, grooms or other

workers that are the exclusive employees of a single stable be covered by workers comp. Workers compensation insurance has been

a fundamental condition of employment for almost all Americans,

including those that perform their tasks under very dangerous conditions for almost a century. Yet, under the rules that the jockeys

are independent contractors, most States allow the riders to bear

6

the risk and costs that are borne by virtually all other employers

in this country.

This is compounded by a rarely issued rule by the National

Labor Relations Board stating that racetrack employees will not be

afforded the right to organize or bargain collectively, under Federal

law, to improve their working conditions. OSHA has not issued any

rules that race tracks must follow to be in compliance where there

are minimal safety conditions. Today, we will also focus on the apparent betrayal of the jockeys by the current leadership to provide

themselves with some of the protections that lawful unions and

other responsible employers supply. That organization is the Jockeys Guild.

Anyone that has seen the movie ‘‘SeaBiscuit’’ knows the Guild

was formed around 1940 to provide some support to disabled jockeys. The working conditions, and hence the need for the Guild to

perform that support function, have not changed much in the intervening half century. Up until 2001 the Guild did a fairly good job

of providing insurance for healthy jockeys and some support for

both temporary and permanently disabled jockeys. On June 15,

2001 the Guild came under the effective control of Wayne

Gertmenian professor of economics at Pepperdine University.

The witnesses today will tell the story of the takeover and the

subsequent revocation of the traditional on-track insurance protection that was previously supplied by the Guild. They’ll tell us that

the usurpation of the Disabled Jockeys Fund and the bringing of

the organization itself to the apparent brink of bankruptcy today.

What I find very interesting is the fact the Gertmenian takeover

was timed in response to a survey taken by the previous administration on whether the Guild should explore affiliation with the

AFL-CIO Union in order to reacquire reasonably priced off-track

health insurance.

Essentially, what happened was the Gertmenian administration

took over to keep out a real union. Dr. Gertmenian will get his

chance to account for his stewardship of the Guild today. It’s up to

the jockeys to decide his institutional fate.

Mr. Chairman, while the betrayal of the Guild management is a

serious failing, it’s the failings of the Government that are truly

unacceptable. I expect that the jockeys appearing today will confirm what we’ve already learned from the staff interviews, that a

number of meaningful steps can be taken to improve the safety of

human participants working at race tracks. Much of what needs to

be done in the way of mandating proactive safety precautions requires changes in law. I look forward to working with you as we

move forward with this investigation and remedial legislation.

One thing we can do now is to bring the evidence from the witnesses to the attention of the Secretary of Health and Human Services. I request that he immediately instruct the National Institute

of Occupational Safety and Health and OSHA to undertake a study

of racetracks and related sites nationwide and to establish guidelines OSHA can use to hold tracks responsible for correcting the

most egregious working conditions that jockeys and exercise riders

must endure to practice their trade. The legal system must compel

the tracks to treat their workers as Americans expect employers to

behave. If we permit anything less, the Congress will have to add

7

its name to the list of institutions that treats riders as second-class

citizens.

Mr. Chairman, I know this issue is very important to you and

I have a couple of other issues I wanted to bring up on other hearings I hope we could have in the near future, but I do not want

to distract from the seriousness of the hearing today, so I’d like to

submit my full statement for the record.

Mr. WHITFIELD. Thank you, Mr. Stupak, and it will certainly be

admitted into the record.

The Chair recognizes the gentleman from Oregon, Mr. Walden.

Mr. WALDEN. Mr. Chairman, I’m going to waive an opening

statement in exchange for more time for questions.

Mr. WHITFIELD. The Chair recognizes the gentlelady, Ms. Baldwin.

Ms. BALDWIN. Thank you, Mr. Chairman. It appears that thoroughbred horse-racing jockeys occupy a rather unique and

unenviable status in professional sports. The NLRB has ruled that

they can’t form a union because they are not anyone’s employees

and the racetrack owners say jockeys are independent contractors

and the horse owners say don’t look at us. I think it’s very important that this subcommittee is undertaking an investigation into

the set of circumstances that has left America’s jockeys without ontrack catastrophic injury insurance. And I expect that this hearing

and this investigation will shed light on this topic. And I hope that

we can hold those responsible accountable.

That said, I share the Chairman’s sentiments that I hope this investigation and this subcommittee can produce a greater good.

Let’s not only hold wrongdoers accountable, let’s find a solution to

the problem of uninsured jockeys, particularly as it applies to ontrack catastrophic coverage. And on this point we could explore a

number of different options. We can remove the obstacles that prevent jockeys from being treated like other professional athletes who

can form players unions. We could put the focus on track owners

and operators to abandon their insistence that jockeys are independent contractors or, alternatively, at the very least, increase the

ridiculously low, particularly $100,000 per incident on-track liability coverage that most of them now maintain. We could put the

focus on horse owners to take greater responsibility in providing

comprehensive health care coverage, or we could, as I say over and

over again on this committee, enact universal comprehensive quality affordable health care for everyone in America.

Based upon what I’ve learned during the course of this investigation thus far, I feel that a great wrong has been committed against

America’s professional jockeys, and I want justice for those who

have been wronged. But I’ve also learned in the course of my life

that a wrong is being committed against 46 million Americans,

that because of the label that they bear, independent contractor,

self-employed, small business owner, student, homemaker, mom,

pop, poor, they find themselves among the uninsured. 46 million

uninsured in America. And I hope that this hearing and investigation will lead to more than making our professional jockeys whole

again, although I mightily want that to happen. I hope that we’ll

also lead to real suggestions and real solutions about the health

8

care crisis that our Nation faces and the phase in our health care

safety net. Thank you, Mr. Chairman.

Mr. WHITFIELD. Ms. Baldwin, thank you very much. I might add

that you’d mentioned thoroughbred racing and that was sort of the

title of the hearing, but we do recognize certainly that there’s a big

quarterhorse racing industry, lot of jockeys who ride quarterhorses,

and as I said in my opening statements, we’re not focused just on

jockeys here, but the backside people, the exercise riders and others. And so, we have a lot of options to look at. At this time, I recognize the gentlelady from Tennessee, Mrs. Blackburn.

Mrs. BLACKBURN. Thank you, Mr. Chairman. I will just welcome

the Birzers and thank them for their time and waive statement, reserve the time for questions.

Mr. WHITFIELD. Thank you. At this time I recognize Ms.

Schakowsky.

Ms. SCHAKOWSKY. Thank you, Mr. Chairman, for holding this important hearing. I want, first, to associate myself with the statement of my colleague, Ms. Baldwin from Wisconsin, in regard to

the need for more comprehensive approach to health care and the

need, in my view, and obviously hers, for national health care program to cover all Americans. Jockeys, exercise riders and other

backside workers have long been forced to endure some of the most

dangerous and undercompensated working conditions of any group

of workers in this country.

Today, we will focus on the dreadful conditions that these courageous citizens must face every working day. We will also focus on

the failures of the current management of the Jockeys Guild to fulfill even the most basic of its purposes, providing for the health and

welfare of disabled jockeys. This is a necessary part of the subcommittee’s investigation. However, there is another part that can’t

go ignored. The employers are not with us today. The racetracks

apparently believe that they have no obligations to injured riders,

save for a $100,000 insurance policy that does not begin to address

the real cost of permanent disability.

They fight any and all attempts to extend the basic right to

workers compensation that the rest of us enjoy and that the State

mandates for all other employers. I understand that you will hold

a hearing, at least one more hearing, Mr. Chairman, for the owners

and managers of tracks, including Mountaineer Track, where Gary

Birzer suffered his tragic accident last year will be called to account for the treatment of the workers that make this $26 billion

per year business successful. I hope this subcommittee finishes

this—I hope before this subcommittee finishes this important work,

we will be able to put together bipartisan recommendations to finally address the injustices that have been the historic characteristic of the business as opposed to the sport of horse racing.

Thank you, Mr. Chairman.

Mr. WHITFIELD. Thank you, Ms. Schakowsky. As I stated earlier,

we’re going to be open and we’re going to explore every avenue to

try to address this significant issue. At this time, I recognize Dr.

Burgess from Texas.

Mr. BURGESS. Thank you, Mr. Chairman, for the recognition.

Thank you for holding this hearing. This morning we’re going to be

focusing on the health and welfare of a specific class of individuals,

9

and I strongly believe it is the role and responsibility of this committee to address the imminent health care needs of our entire Nation. Mr. Chairman, thank you for bringing yet another specific

health-related issue not only to the committee’s attention, but also

to the public’s attention. Additionally, I would like to thank you

and extend—I would like to thank and extend my sympathies in

advance to those individuals and their families who are with us

today, those individuals who have been injured and have graciously

agreed to share their stories with us today.

Horse racing is inherently dangerous. I’m sure no one will argue

with that statement, but there are also many things in life that are

dangerous, and hence the reason that we try to protect ourselves

and our families from the unthinkable. Yet it is truly unthinkable

that the safety net we have created to protect ourselves will be

taken away from us without us even knowing it.

Like we do with all insurance, these jockeys relied on the Guild

to protect them. They participated in the dangerous profession for

the good of the sport, believing that if something happened to

them, they would be protected. For the Guild to rend that safety

net and expose these jockeys to this trouble is not only unthinkable, but in my opinion, it is criminal. While I do not claim to be

an expert in this industry or an expert in the law, before coming

to Congress, I was just a simple country doctor, but I do know an

unhealthy situation when I see one. This predicament cannot easily

be cured and the remedies for the families will be difficult, but I

do hope this hearing will not only expose the various ailments, but

begin the slow road to recovery for this entire profession.

To do this, tough questions must be asked and answered by both

the Jockeys Guild and the consulting firm Matrix Capital Associates. I look forward to what will likely prove to be a very lively discussion this morning. Again, Mr. Chairman, thank you for bringing

this hearing to us so we can address some of these important concerns with regards to the health and welfare of this industry. I

yield back the balance of my time.

Mr. WHITFIELD. Thank you, Dr. Burgess. At this time, I recognize the gentleman from Florida, Mr. Stearns.

Mr. STEARNS. Thank you, Mr. Chairman, thank you again for

holding this hearing on catastrophic injury insurance for professional jockeys and others in the horse racing industry that you

mentioned, not just the jockeys. I think the members should realize

that as well as people in audience. I am from Ocala, Florida. We

have about 469 horse farms down there. It’s a majestic sport that

we want to preserve and we’ve had some winners from Ocala. In

fact, back in 1955, the 1955 Champion 2-year old colt Needles won

the 1956 Kentucky Derby and Belmont Stakes, so I’m making a

plug for my home town. And of course Fleet Alex is a Florida-bred

horse down in Palm Beach County. So we’re well aware of the jockeys. We in Ocala are very concerned and so we appreciate this

hearing. These hard working agile jockeys put their life on the line,

and who’s looking after their health, we find out really no one is.

This is a very vigorous sport. It’s a very dangerous sport with a

high rate of accidents, and my staff and I were talking, we were

reminded we have a boxing bill dealing with setting up a commission to establish standards for health for these boxers, and so I’m

10

very glad, Mr. Chairman, that we’re looking at this particular case

for jockeys. Mr. And Mrs. Birzer, I’m sorry that you’re here, I’m

sorry, Mr. Birzer, for your injury. You’re very wise to come forward

to talk about it so we in Congress can empathize and try to do

something about it. Mr. Donahue seems to be sort of a whistleblower for his colleagues, I think, for questioning the accounting of

the Disabled Jockeys Fund and being fired for troubles.

So I appreciate your courage in sharing your painful experiences

and memory with this subcommittee. It’s only through hearings

I’ve found that we’ve learned what is right and working in our vast

system of commerce, and we also need to say because of this hearing, we need to improve and we need to have legislation to do that.

Mr. Colton, in looking at your testimony, I believe you submit

that, ‘‘I believe this hearing could some day lead toward creating

a Nationwide program that would include insurance for all backside workers, as the Chairman mentioned, as well as national uniform national safety standards that would help reduce injuries.’’

Well, on a profession wide insurance plan, this House has debated and passed the associated health plans repeatedly in recent

years. This could be an option for all of yours. Meanwhile, on uniform safety and standards, my subcommittee, the Consumer Protection and Trade, has examined similar issues like jockeys in a

dangerous sport. As I mentioned, boxing is one case. So I’m looking

forward to discussing the protections for jockeys and also for the

backside workers. And again, thank you, Mr. Chairman for having

this hearing.

Mr. WHITFIELD. Thank you, Mr. Stearns. If there are no further

opening statements, then we will begin with the first panel.

[Additional statement submitted for the record follows:]

PREPARED STATEMENT OF HON. JOE BARTON, CHAIRMAN, COMMITTEE ON ENERGY

AND COMMERCE

Thank you Chairman Whitfield. Let me also thank you for launching this investigation into the heath of jockeys and other horse-racing industry workers. This billion-dollar sport could not exist without the daily risks these people take, sometimes

for minimal pay, and often without the insurance they thought they had.

The people who race horses for a living are not a large or particularly influential

group. They engage eagerly in a dangerous sport in which a mistake or a fluke can

maim them. It doesn’t happen every day, but it happens. And when it does, jockeys

rely on their insurance to see them through. We’ll hear today what happens when

a jockey who was the victim of a terrible accident discovers he was the victim of

a terrible betrayal, too.

Our witnesses today are professional jockeys who are well known in the world of

thoroughbred horse racing. They will explain the risks they face, and how they

banded together and entrusted the Jockey’s Guild with funds to buy insurance to

protect them and their families from the catastrophic financial losses that can accompany injuries.

We’ll also hear about a classic story of betrayal, in which management of the

Jockey’s Guild let them down. And we’ll hear the disturbing story of Gary Birzer,

who learned too late that the insurance coverage he was promised did not exist.

This was not a clever sting. It was a crude deception performed by an official in

whom trust as well as money had been invested.

Today, we will examine a set of specific actions taken by people in charge of one

particular industry organization, and will see how those actions made a tragic injury so much worse. I look forward to learning more about the particulars of this

case, as well as to examining in this and other hearings the broader problems exposed by this alarming episode.

Mr. Chairman, this is an important if under-appreciated issue, and the bright

light you will shine on it in coming months should bring attention to this problem

in this sport.

11

As you conduct the Subcommittee’s oversight, I hope the horse racing industry

will pay close attention and deal with these problems. We’ll be watching, too, and

there should be no question that any failure to take action will draw additional

scrutiny by Congress. If we must, I promise you that we will exercise our jurisdiction over professional sports and public health to ensure the welfare of these athletes is protected.

This Committee will continue to do its own work to gather the facts necessary for

the full story on these problems. We’ve already subpoenaed records and will do so

again, if necessary, to collect the factual information required for the Committee’s

oversight work to proceed.

Let me offer my warm thanks to the witnesses’ and especially Mr. and Mrs.

Birzer on the first panel—for taking the time to help us explore this issue today.

I am hopeful your sincere efforts will help restore some trust in the system you have

long relied upon for assistance when injured—and will help the movement towards

improving the health insurance situation for the sport overall.

I look forward to the testimony and yield back the remainder of my time.

Mr. WHITFIELD. I’m going to introduce the first panel, again,

even though I did so in the opening statement, then before we do

all the swearing in, we want to show a video that I think gives a

very clear example of just how dangerous this sport is, and particularly for the jockeys who are riding in these races.

But the witness on the first panel is Mr. Gary Birzer and his

wife Amy, and as I mentioned earlier, he was involved in an accident in Mountaineer Park in 2004 and is permanently disabled,

and we appreciate your being here. Before we swear you in and

any attorneys that you might have with you, I would, at this time,

ask that we show this video. Put out some of the lights if you

would.

[Video played.]

Mr. WHITFIELD. I think you would agree with me that that short

video does show quite clearly the challenges in this profession, and

I think all of us would be irresponsible if we did not look into this

in some depth and try to come up with some solutions to maybe

have some national standards on safety and to make sure that people participating in this sport that creates an economic benefit of

$26 billion annually across the country, that there be adequate coverage for anyone participating in this sport.

I’ve introduced Mr. Birzer and his wife Amy, and once again, we

genuinely appreciate your being here. As I stated in the opening

statement, this is an Oversight and Investigations hearing, and

when the committee does that, we have the practice of taking testimony under oath. And so I would ask you, Mr. Birzer, and your

wife Amy, do you have any objection to testifying under oath this

morning?

Mr. GARY BIRZER. No, sir.

Mr. WHITFIELD. I would also advise you under the rules of the

House and the rules of the committee you are entitled to be advised

by legal counsel. Do you desire to be advised by legal counsel during your testimony today?

Mr. GARY BIRZER. Yes.

Mrs. BIRZER. Yes.

Mr. WHITFIELD. So both of you desire to do so. In that case,

would you please identify your counsel for the record, please.

Mr. KOCZKUR. Walt Koczkur on behalf of Gary Birzer.

Mr. WHITFIELD. I’m sorry, what?

Mr. KOCZKUR. Paul Koczkur.

Mr. WHITFIELD. For Gary Birzer.

12

Mr. LUPO. Dane Lupo on behalf of the Birzers.

Mr. WHITFIELD. Okay. All right. Let me ask this, will the two

legal counsels, will you be giving testimony today. All right. Then

at this time I’m going to stand and I would ask Mr. Birzer you to

raise your right hand and Amy if you would stand and raise your

right hand and I’ll swear you in.

[Witnesses sworn.]

Mr. WHITFIELD. Okay. Each of you are now under oath and we

have a number of witnesses today and we value the testimony of

each witness, and I want you to know in advance that your entire

testimony that you have already submitted to us will be placed into

the record and we’re going to ask that you try to—I won’t hold you

totally to this, but try to complete your testimony in 5 or 6 minutes, if you can possibly do that. So at this time, Mr. Birzer, you’re

recognized for your opening statement, and before you give your

testimony, be sure that the microphone is on by pushing that button so that it shows.

TESTIMONY OF GARY BIRZER, FORMER PROFESSIONAL JOCKEY, ACCOMPANIED BY AMY BIRZER, PAUL KOCZKUR, ATTORNEY, AND DANE LUPO, ATTORNEY

Mr. GARY BIRZER. It’s on now. My name is Gary Birzer, I’m a

second generation jockey. My father rode and trained race horses.

I started riding in February 1997 in Grand Island, Nebraska. I

rode on many racetracks such as Lincoln Park, River Downs, Hoosier Park, Turfway Park, Beulah Park, Suffolk Downs, Canterbury

Park and Mountaineer Park. My wife and I were engaged in July

1998. After talking to two Guild members, they suggested that I

join the Guild, pay the hundred dollars yearly fee and $2 per

mount member fee. I agreed. In 6 months before I married—Amy

and I were to be married, I became a full member, feeling secure

that the fact that me and my family would have appropriate insurance.

When I joined the Guild, Gary Stevens was president, and when

I received my handbook, it read we take care of our own, and that

included insurance for on-track injuries. When the Guild was in financial trouble in 2001, I was one of the few that stayed a full $10

per mount member plus $100 annual fee, thinking that if anything

would happen to me, that they would take care of those who remain loyal.

When Dr. Gertmenian and his management company, Matrix

Capital took over, I remained a loyal member, still putting in the

maximum $10 per ride. I attended all Guild meetings when they

came to the racetrack. Not once during any of these meetings was

anything said of the catastrophic insurance being canceled. No

other riders said anything about it either. If any of the other even

20 riders in the meeting had heard it, the news would have spread

around like wildfire.

I believe that the Guild would have covered me. I would have

never ridden without insurance and put my family in this jeopardy.

On July 20, 2004 my life changed forever. I remember bits and

pieces right after my accident. I was being heavily medicated to

lessen the pain for my injuries and treated infections. I don’t remember exactly when I found out the Guild was not going to help

13

me. However, my wife was dealing with it well before I became

aware of this situation. I was in denial, depression for the longest

time. The first time I talked to the Guild, I was in Squirrel Hill,

one of the best rehab centers for spinal cord injuries in the country.

Amy was crying and near a nervous breakdown.

I called Albert Fiss. I left a message on his answering machine

to call me. He finally called me back and asked me what he could

do for me. I said Squirrel Hill is going to give me 4 weeks as charity but I need another 4 weeks, can the Guild pay? He answered

back yes. I told him he needed to talk to Joyce Watson in the admissions.

Later, Ms. Watson came back to my room and said that Mr. Fiss

agreed to pay for 4 more weeks then take care of anything else I

needed, when I had a meeting a few days later at Squirrel Hill that

involved Squirrel Hill’s management, Guild representatives, Mr.

Fiss, Darrell Hare, Larry Samuel, jockeys Bobby Walker, Junior,

Deshawn Parker and Dana Whitney.

That morning, Mr. Fiss told my wife that I did not have to leave

Squirrel Hill because the Guild would pay for the additional 4

weeks, just as the jockeys at Mountaineer Park, David Shepherd,

and all my family.

Somehow things changed in that meeting later that day. I went

into a meeting thinking I was going to stay but the meeting went

on, the discussion turned into a different direction. I was going to

West Virginia. They assured me that the people are friendly, but

they were not specialized in spinal cord injury. The day before I

was to leave Squirrel Hill, Dr. Gertmenian and Albert Fiss came

to visit me. The only thing they wanted to discuss was that I

should sue Mountaineer Park, not why the Guild couldn’t help me.

I was then transported by ambulance to West Virginia Rehab

Center. I fell into a deep depression there during my stay. While

I was there I had three visitors, Kelly Witsma, Jose Santos, and

Johnny Velazquez. They indicated to me that they were also not

aware of the catastrophic insurance being canceled. Terry Thompson, a fellow jockey at Prairie Meadows racetrack, was listening to

a radio program called The Races and Beyond where Dr.

Gertmenian was speaking. He heard that Dr. Gertmenian said on

the air that the Guild was taking care of all of Gary Birzer’s medical bills. Do I go ahead and keep reading, sir?

Mr. WHITFIELD. You can continue.

Mr. GARY BIRZER. Thank you. He then called my brother Alex

and told him what he had heard. Alex said something to my agent,

Jimmy Isabel. Jimmy immediately called the radio station. Jimmy

was available to speak on the air and confirmed what was said. As

Dr. Gertmenian had already hung up the phone and was no longer

speaking, the radio station confirmed that yes, that is what we also

heard, Dr. Gertmenian saying that all of Gary Birzer’s bills were

being paid. Then Jimmy on the air confirmed through the station

it was not true, that Gary’s medical bills were not being paid by

the Guild.

I then left West Virginia on November 18, 2004, after 4 long

months of being bounced around hospitals, rehab centers, struggling to accept my new life I’ve been dealt battling with manageVerDate 11-MAY-2000 09:27 Nov 28, 2005 Jkt 000000 PO 00000 Frm 00021 Fmt 6633 Sfmt 6602 24255.TXT HCOM1 PsN: HCOM1
14

ment and the representatives of the Guild to provide some assistance and trying to keep my family from falling apart.

If it wasn’t for my dear wife, Amy, I would never come through

this as well as I have. She’s been my rock and my soulmate. We

decided to come home to Cincinnati to be closer to family. In September 2005, I traveled back up to Mountaineer Park to visit my

jockey friends. They said that the Guild had informed them that

they were taking care of Gary Birzer, and taking care of all my

medical bills. They said that West Virginia State Rehab Center

was one of the best in the country.

In the last year, I’ve had a lot of trouble with the Guild for reimbursing us for all my catheters and the need for medical supplies.

We have to make many phone calls and dealt with much aggravation trying to get the reimbursements processed. After remaining

loyal for so many years and relying on the promises, and when

they have talked directly to me, I have felt I’ve been completely let

down.

[The prepared statement of Gary Birzer follows:]

PREPARED STATEMENT OF GARY BIRZER

My name is Gary Birzer. I am a second generation jockey. My father rode and

trained horses. I started riding in February, 1997 at Fonner Park in Grand Island,

Nebraska. I rode at many racetracks such as Lincoln Park, River Downs, Hoosier

Park, Turfway Park, Buehla Park, Suffolk Downs, Canterberry Park and Mountaineer Park. My wife and I were engaged in July 1998. After talking to two Guild

members, they suggested that I join the Guild, pay the $100 yearly fee and the

$2.00 per mount member fee. I agreed and six months before Amy and I were married, I became a full member, feeling secure in the fact that me and my family

would have the proper insurance. When I joined the Guild, Gary Stevens was President. When I received my handbook, it read ‘‘WE TAKE CARE OF OUR OWN’’. And

that included insurance for on-track injuries.

When the Guild was in financial trouble in 2001, I was one of the few that stayed a full $10.00 per mount member, plus the $100 annual fee, thinking that if anything

would happen to me, they would take care of those who remained loyal. When Dr.

Gertmenian and his management company, Matrix Capital, took over, I remained

a loyal member, still putting in the maximum $10.00 per ride. I attended all the

Guild meetings when they came to the track. Not once during any of those meetings

was anything said about the catastrophic insurance being canceled. No other rider

said anything about it either. If any of the other 20 riders in the meeting had heard

it, the news would have spread like wildfire. I believed that the Guild insurance

would cover me. I would have never ridden without insurance and put my family

in jeopardy.

On July 20, 2004 my life changed forever. I only remember bits and pieces right

after my accident, as I was being heavily medicated to lessen the pain from my injuries and to treat infections. I don’t remember exactly when I found out that the

Guild was not going to help me; however, my wife was dealing with it well before

I became aware of the situation. I was in denial and very depressed for the longest

time. The first time I talked to the Guild, I was in Squirrel Hill, one of the best

rehabilitation centers for spinal cord injuries in the country. Amy was crying and

near a nervous break down.

I called Mr. Albert Fiss. I left messages on his answering machine to call me. He

finally called me back and asked me what he could do for me. I said, ‘‘Squirrel Hill

is going to give me four weeks as charity but I need another 4 weeks. Can the Guild

pay?’’ Albert answered back ‘‘yes.’’ I told him he needed to talk to Ms. Joyce Watson

in Admissions. Later, Ms. Watson came back to my room and said that Mr. Fiss

agreed that the Guild would pay for 4 more weeks and take care of anything I needed.

We had a meeting a few days later at Squirrel Hill that involved Squirrel Hill

management, Guild representatives Mr. Fiss, Darrell Haire, and Larry Saumell,

Jockeys Bobby Walker Jr., Deshawn Parker, and Dana Whitney. That morning Mr.

Fiss told my wife that I did not have to leave Squirrel Hill because the Guild would

pay for the additional 4 weeks, just as he told the jockey colony at Mountaineer

Park, Dave Shepard, and all my family. Somehow, things changed in the meeting

15

later that day. I went into the meeting thinking I was going to stay, but as the

meeting went on, the discussion turned in a different direction and was around me

going to the facility in West Virginia. They reassured us that the people were friendly there, but were not specialized in spinal cord injuries.

The day before I was to leave Squirrel Hill, Dr. Gertmenian and Mr. Fiss came

to visit me. The only thing they wanted to discuss was how I should sue Mountaineer Park, not why the Guild couldn’t help me. I was then transported by ambulance to the West Virginia rehabilitation center. I fell into a deep depression during

my stay there. While I was there, I had three visitors, Kelly Witsma, Jose Santos,

and Johnny Valesquez. They indicated to me that they were also not aware that

the catastrophic insurance was canceled.

I then left West Virginia on October 18, 2004, after three long months of being

bounced around hospitals and rehab centers, struggling to accept the new life I’ve

been dealt, battling with the management and representatives at the Guild to provide some assistance, and trying to keep my family from falling apart. If it wasn’t

for my dear wife, Amy, I would have never come through this as well as I have.

She is my rock—She is my soul mate. We decided to come home to Cincinnati to

be close to family.

After I was home, Terry Thompson, a fellow jockey at Prairie Meadows racetrack,

was listening to a radio program called Races and Beyond, where Dr. Gertmenian

was speaking. He heard Dr. Gertmenian say, on air, that the Guild was taking care

of all of Gary Birzer’s medical bills. He then called my brother Alex and told him

what he heard. Alex said something to my agent, Jimmy Isabel and Jimmy immediately called the radio station. Jimmy was able to speak on air to confirm what

was said. As Dr. Gertmenian had already hung up the phone and was no longer

speaking, the radio station confirmed that ‘‘yes, that is what we heard also—Dr.

Gertmenian said that all of Gary Birzer’s bills were being paid’’. Then Jimmy, on

air, informed the station that this was not true—that none of Gary’s medical bills

were being paid by the Guild.

In September 2005, I traveled back up to Mountaineer Park to visit my jockey

friends. They said that the Guild had informed them that they were taking care of

Gary Birzer and taking care of all of his medical bills. They said that the West Virginia State Rehab Center was one of the best in the country.

In the last year, I have had a lot of trouble with the Guild reimbursing us for

my catheters and other needed medical supplies. We have had to make many phone

calls and dealt with much aggravation in trying to get the reimbursements processed.

After remaining loyal to the Guild for so many years and relying on their promises, both in group meetings and when they have talked directly to me, I feel that

they have completely let me down.

Mr. WHITFIELD. Mr. Birzer, thank you very much, and at this

time, we’ll recognize Mrs. Birzer for her opening statement. Mrs.

Birzer.

TESTIMONY OF AMY BIRZER

Mrs. AMY BIRZER. My name is Amy Birzer. My husband is Gary

Birzer. On July 20, 2004 our lives were changed forever. This summarizes events that have occurred since that day. It was the seventh race at Mountaineer Race Park in West Virginia. Going into

the first turn, Lil Bit of Rouge was for four wide and making her

move. A jockey’s wife ran over to me and said ‘‘Amy, Gary went

down.’’ She had a panicked look on her face. Okay. I thought calm

down and give him a minute to catch his breath and get to his feet.

I walked outside to talk to the security guard but he didn’t know

anything as of yet. A few more minutes have passed and Gary still

hadn’t gotten to his feet. I went inside and watched the replay,

that’s when I saw all 110 pounds of my husband being thrown head

first into the dirt going 40 miles per hour.

I raced over to be with him. By this time they were loading him

in the ambulance. I rode in the front seat. I heard my husband say

no, sir, I can’t feel that. That’s when the tears started streaming

down my face. Never did it enter my mind that Gary wouldn’t be

16

covered for these medical services. It wasn’t even a concern since

I knew we had insurance and there was also catastrophic policy in

place for jockeys. After being at the local hospital for several hours,

Gary was transported by helicopter to the University of Pittsburgh

Medical Center. It was there that I learned my husband would

never be able to walk again. In fact, they had to perform a surgery

and place a metal rod in his neck just so he would be able to hold

his head up right.

My husband was diagnosed as a C6, C7 quadriplegic. He was at

the University of Pittsburgh Medical Center for 4 weeks with bills

that escalated to over $450,000. We were in for the battle of our

lives. It was the first week in August 2004, when Mr. Albert Fiss,

vice president of the Jockeys Guild, came to see Gary in the ICU

in Pittsburgh. Present at the time were myself, Bonnie Birzer, sister-in-law, and a family friend, Pam Isabel.

It was at this time that they informed us the Guild could be of

no help to Gary. He indicated the Guild had no money to help at

all. He said you need to get a lawyer and go after the racetrack.

Bonnie then asked if they could help us by using one of the Guild’s

lawyers. Mr. Fiss said no, but they could recommend one in our

area. I thought to myself here’s a guy who’s supposed to want nothing but the best for jockeys, and while my husband was fighting

for his life with ventilators sustaining him, running excessively

high temperatures, being packed in ice around the clock, all he

wants to know is how come I haven’t thought about suing the racetrack.

I wanted to scream at him do you not understand that my husband is fighting for his life right now and we thought you were the

very organization that was committed to helping jockeys and their

families through tragedies like this.

It was at this point that I realized from my conversation with

Mr. Fiss that Gary was not covered for on-track injuries and the

catastrophic policy was no longer in existence. We were completely

left with no coverage whatsoever. The second week in August,

Gary’s father came to be with Gary. That same week, Mr. Johnny

Beech, a Guild rep, was at Prairie Meadow Racetrack in Iowa. He

was talking to Gary’s mother. However, he was not aware at the

time that it was his mother. She asked him how he was planning

to help Gary Birzer.

He replied I have a meeting with his parents tonight to discuss

it. Gary’s mom said really; his father is in Pittsburgh with Gary,

I’m his mother, what time is the meeting? Mr. Beech turned and

walked out of the jockeys room.

The third week in August, Gary’s mom came up for a visit. Ms.

Kelly from Pittsburgh medical said next week Gary will be ready

for rehabilitation. You have three options, the 11th floor here at

the hospital, Squirrel Hill or a nursing home. Tears instantly started coming out of my eyes. I know that Squirrel Hill would not take

Gary without insurance. My husband is only 29 years old. There

was no way I was going to send him to a nursing home. The 11th

floor of the hospital was out of the question. He needed to be in

a rehabilitation center where they specialized in spinal cord injuries.

17

He was already in deep depression, and I could not bear to go

into his hospital room and tell him he could have gone to Squirrel

Hill if we had had insurance, but instead, had to settle for a nursing home or rehab on the 11th floor of the hospital. She suggested

then that we get an advocate. Mr. Joe Delong, a West Virginia

State representative was called. He used to be a jockey’s agent, and

his dad trains horses at Mountaineer so he knows Gary and his

agent very well.

Joe Delong sprung into action right away speaking out on our behalf, trying to find a way for Gary to stay in Pennsylvania to get

the therapy he so desperately needed. During these 2 weeks, phone

calls were placed to Mr. Fiss from Jimmy Isabel, Gary’s parents

and myself. None of the phone calls were ever returned. During

this time, I also applied for help from the State of West Virginia

but was turned down on the spot. The lady who helped me said,

Ms. Birzer, you have too many assets for us to be of assistance to

you at this time. In the State of West Virginia if you’re over the

age of 21, acute rehabilitation is not provided.

Then Ms. Kelly came back to tell us our story has really touched

her heart. She’s been working with people from Squirrel Hill and

they agreed to take Gary for 4 weeks as a charity case. For the

first time since the accident I cried tears of joy. Finally, I had some

kind of hope to give my husband. Gary went to Squirrel Hill where

he was teamed up with Randy, one of the best therapists there. I

started seeing my husband’s will to live. The first week was very

hard for Gary. Our 2-year old daughter wanted nothing to do with

her daddy because she was so afraid of the wheelchair. Although

it broke his heart, he was determined to find a ways to ease her

fears. His chair has a horn and soon he taught her how to honk

it. She was soon warming up to the chair and coming around her

daddy again.

Randy told us that Gary could live completely independent but

it would take hard work and determination. He told us a few success stories about spinal cord-injured patients. I saw a change in

my husband’s attitude. You see, Gary thought everything was

stripped away from him. He went from being a successful jockey

to being someone who could no longer use the restroom, roll over

in bed, feed himself, cook for himself or even hold his daughter.

The bed sores were a constant worry too. From his nipple line

down he could no longer feel his body. He has the use of wrist

flexors but not his fingers. So picking up things was next to impossible.

Now there’s someone telling him he can live completely independent with a little hard work. This was huge. The next few

weeks they worked with Gary on transferring him in and out of his

wheelchair and getting him stronger; however, the four charity

weeks were come to an end, and we still had no response from Mr.

Fiss on how the Guild could help my husband. I was still calling

his office and cell phone leaving message after message but still no

response. I was simply asking for any help with his rehab at Squirrel Hill or maybe a wheelchair, anything would be greatly appreciated.

Gary decides to call Mr. Fiss himself, and finally the phone call

is returned. Albert informed Gary that whatever he needed, the

18

Guild would take care of it. Gary asked about 4 more weeks of rehabilitation and a wheelchair. Mr. Fiss agreed they would take

care of that also. He just needed the name of the person to make

the arrangements. Gary told him to speak to Joyce Watson from

admissions.

Ms. Watson spoke with Mr. Fiss, and soon she was back in

Gary’s room, all smiles, stating Mr. Fiss agreed the Guild would

pay for Gary to stay and they would take care of any of his needs.

Again, tears of joy rolled down my face. I remember saying see,

baby, things are going to be okay, just don’t give up. I remember

driving home that evening calling everyone and telling them the

Guild is going to help Gary, he gets to stay at Squirrel Hill.

Unfortunately, we soon learned this was just another lie from

Mr. Fiss. He went back on his word. I tried calling by phone again

and when I finally reached him, I asked why won’t you help my

husband. Mr. Fiss said try to understand horse racing is a billion

dollar industry. Jockeys should not be paying their own insurance.

We’re using your husband as a guinea pig to make a statement. I

immediately broke down raising, my voice and fighting back tears.

Gary needs the guild’s help. What about the fund; can you use that

to help him?

What about the Endowment Fund? Can you use that to help

him? Mr. Fiss said that he would talk to the Board on Monday, as

they were closed on the weekends.

I was so distraught over what to do. I talked to Alex, Gary’s

brother and also a jockey and a member of the Guild. Alex told me

that Dave Shepherd, a high member in the Guild, is a family

friend. He thinks of Gary like a son. Dave was even there when

Gary rode his first race. He said to me that Dave was going to take

care of things, and there is no way he is going to let his little brother get moved from Squirrel Hill. It is all part of a plan and not to

worry.

I felt I had to do something more, so I started talking to other

jockeys and their girlfriends. That’s when I learned that Larry

Saumell and Darrell Haire had been down at the track telling everyone that the Guild is helping Gary Birzer. I became upset, again

knowing they were lying to these jockeys. I had tears in my eyes

when I looked at the riders and pleaded with them. Please, listen

to me. If you go down during a race, the Guild will not help you.

They all looked at me with disbelief. I told them they better pray

to God they don’t go down tonight because they will soon learn the

truth about the Jockeys’ Guild.

The Guild reps were to be back at the track on Monday, September 13, around 6 o’clock so everyone could hear what they had

to say. I arrived at the track at 6 with Mr. Joe Delong, Dan Taylor,

my lawyer at the time, and two of my girlfriends. Larry Saumell

and Darrell Haire showed up at 7. They were talking to Chad Murphy, and all three came over to me to ask what the problem was.

Again, with tears in my eyes, I simply asked the question, why

aren’t you helping my husband? He is a jockey and a member of

the Jockeys’ Guild. Why do you keep telling the jockeys that you’re

helping us when you’re not?

19

They said I was angry at the wrong organization. They said they

had four lawyers working for Gary. I was shocked to hear this.

What four lawyers? This was the first that I’ve heard of this.

Mr. Haire also kept reassuring me they were paying for Gary’s rehab. They said the Guild was going to cut a check for $15,000

so Gary could stay at Squirrel Hill. Dan Taylor immediately called

Mr. Fiss to confirm the $15,000 for Gary’s rehab. Mr. Fiss said that

Gary was misinformed, and the Guild was not paying for the continued rehabilitation. Mr. Taylor informed him that he better get

his ‘‘boys’’ in line because they are telling the jockeys and Mrs.

Birzer that a check will be cut to be used for Squirrel Hill.

When we walked back in the jocks’ room, I stated, for all to hear,

the Guild was indeed not paying for Gary’s rehab and he is being

moved to a State facility in West Virginia. Mr. Haire called Mr.

Fiss and told him he needs to get down here right away. They

moved the meeting out of the jocks’ room to an upper office, as the

jockeys were getting upset. They then asked me if I had asked the

racetrack for help, and I replied that I had. Rosemary, who I talked

to at the track, said she had talked to her legal team and said they

have no money to help my husband. They offered to go with me to

talk to her again, and I declined. They decided to have another

meeting with the jockeys but advised that I should not attend because of my emotional state.

The next day Larry Saumell and Darrell Haire went to Squirrel

Hill with me to see Gary. They asked me about the guinea pig comment and apologized for Mr. Fiss making that statement. When we

arrived, we went and talked to Joyce and they informed her they

would be cutting a check for $15,000 to pay for the additional 4

weeks of rehab. My case manager at that time, Melissa, also spoke

with them and discussed the facility in West Virginia. They asked

Gary if they paid for an apartment for his wife in West Virginia

would he be willing to go there. He said he needed to stay at Squirrel Hill, as it was one of the best rehab centers for spinal cord injuries.

After Larry and Darrell left, Gary again called his brother Alex,

crying, and telling him they are moving him to the State facility.

Alex was upset because the Guild had reassured him that Gary

was not to be moved.

The next day Mr. Fiss came into town, and we had a meeting

with the hospital staff. Mr. Fiss and Darrell Haire rode with me

and kept assuring me they were not moving Gary. Darrell asked

me about the State facility in West Virginia. I told him it’s a step

up from a nursing home and nothing compared to Squirrel Hill.

When we got to the meeting, Mr. Fiss never offered any money.

In fact, the discussion completely went in the opposite direction. He

was pushing for Gary to go to West Virginia. Gary said he didn’t

want to get on Medicaid to go to a State facility. Squirrel Hill is

where we thought he needed to stay. The specialist said that Gary

could eventually lead a normal life if he could continue to work

hard and should not have to give up everything he has worked so

hard for just to be on Medicaid and go to a State facility.

Our battle to keep Gary at Squirrel Hill was lost, and he was

soon moved. The West Virginia institution agreed to take Gary

without insurance or Medicaid. They said he needed to be transVerDate 11-MAY-2000 09:27 Nov 28, 2005 Jkt 000000 PO 00000 Frm 00027 Fmt 6633 Sfmt 6602 24255.TXT HCOM1 PsN: HCOM1
20

ported by ambulance, and the cost would be $1,500. Mr. Fiss

agreed that the Guild would pay for that bill.

The day before Gary was to be moved, Dr. Gertmenian and Mr.

Fiss came back to see Gary and I. Dr. Gertmenian began telling

me about his daughter, who’s in a wheelchair and how stressful it

is. He went on to say that I’m going to need all the help and support from family and friends. With a 2-year-old daughter and a

husband in this condition, things were going to be tough on me. He

remembered his wife cried and cried over what happened to their

daughter and how helpless he felt because he could do nothing to

help her.

He went on to say he knows what it is like to be in my shoes

and how hard it is going to be for me. He said, I need the industry

to think we have no money, but he knows people in high places and

from time to time he would be sending me money. He also said he

was going to give me his bedside number and if I needed anything

just to call him. I became boiling mad at this point and thought,

how dare he discuss this situation with me that was so far removed

from what I was going through.

Since July 20, I have been begging for help, and in return I’ve

been given the runaround and told nothing but lies. The only thing

he has done for my husband is make a spectacle out of him and

convinced all the riders that Gary Birzer is going to help change

the industry. The only thing Gary and my family got was the short

end of the stick, and how dare he say he knows what it is like to

be in my shoes. I got up as and walked out of the room, as I could

listen no more.

Gary ended up being transported to the Institute of West Virginia on September 20, 2004. They agreed to take him without insurance or without Medicaid. I was grateful they took him, but I

can’t stress enough the strain it put on my family and my daughter. I had to stay in a hotel room near the facility and could no

longer be with my daughter Robin. It was the hardest thing I had

to do, leaving her as she was screaming for her mommy.

Gary was in the West Virginia facility when I received a call

from Dr. Gertmenian asking me if I was going to sue the racetrack.

I told him the track was putting a ramp at our home so Gary could

get in the house, and they were also holding a benefit dinner for

him. I told him I couldn’t go after the track right now because they

were the only ones helping at this point and we desperately needed

help. His remark to me was, if you let them buy you for a couple

hundred dollars, then there is nothing further I can help you with.

If Gary wants to talk, he can call me. And then he hung up.

Once we were settled in the rehab center, we soon learned the

lack of experience and the knowledge they had about spinal cord

injuries. It was a huge setback from where he was. It was a nightmare as we watched them try to take care of Gary.

I asked them one day why Gary’s hands were not washed. Their

reply to me was, we thought it was buildup from horseback riding.

They simply didn’t know how to care for the skin or the hands of

a spinal cordinjured patient.

Also, instead of working with Gary on transferring him in and

out of bed, they simply picked him up to move him. All the hard

21

work teaching him to transfer was for nothing, as they did not continue the same therapy.

Even when he needed a shower, the two aides just man-handled

him and didn’t try working with him to bathe himself so he could

become more independent.

I asked them if they could just assist Gary in transferring from

bed to chair. They agreed to try. However, because of the lack of

the knowledge on transferring a patient, they almost dropped him.

Thank goodness I was there. If not, he would have been on the

floor.

The doctors were overmedicating him, and the therapists were

not educated on spinal cord injuries. Gary got a bad staph infection

and had to be quarantined to his room by himself. They said that

he had to stay in bed and get turned every 2 hours to prevent bedsores. Gary ended up getting a very bad and very large bedsore.

I asked how he got that, and they indicated they were short-staffed

over the weekend and he didn’t get turned as much as he should.

They apologized.

Gary kept losing weight and went down to 94 pounds. Depression

began setting in, and this was the very rehabilitation center that

the Guild told the jockeys and my family that was one of the best

places Gary could be.

In October, a few weeks prior to Gary’s move to Cincinnati, Dave

Shepherd visited Gary in the West Virginia facility. He informed

me, ‘‘the war had begun.’’ He was referring to the whole insurance

issue between riders and racetracks. This was also soon after the

incident when Shane Sellers was removed from Churchill Downs in

handcuffs. He asked me again if we were going to sue Mountaineer.

I said, no, not at this time. He promised me they were going to

take care of Gary and not let him slip through the cracks and that

he has discussed this with Dr. Gertmenian.

Gary was losing his will to live and something needed to be done.

We decided that we needed to move Gary out of West Virginia and

back home in Cincinnati to be with family who wanted to help us.

With many phone calls made by my family and much media attention, the Guild paid $15,000 for a wheelchair-accessible van and

$9,000 for 1 year’s rent for an apartment in Cincinnati. West Virginia agreed to pay for Gary’s wheelchair and a shower chair.

We registered Gary at Drake, a well-known rehabilitation facility

in Cincinnati, as an outpatient, as they would not take him inpatient with no insurance. We secured a nurse to come in the home

to help Gary with medical needs the first few weeks but had to discontinue that service as it was extremely expensive.

We still live in Cincinnati in the apartment; and finally, after 6

months of effort, we have been approved for Ohio Medicaid. Gary

no longer can work, and because I am his sole caregiver, I also cannot work outside the home. We are currently living on Social Security, which barely pays the bills. Our medical expenses have accumulated to over $500,000, which we cannot begin to pay back. The

Guild has not done anything further to help us.

Mr. WHITFIELD. Mrs. Birzer, thank you for your testimony; and,

Gary, thank you for your testimony. I know it is not easy for you

to give this testimony, but it certainly does provide valuable information for us.

22

[The prepared statement of Amy Birzer follows:]

PREPARED STATEMENT OF AMY BIRZER

My name is Amy Birzer. My husband is Gary Birzer. On July 20, 2004, our lives

were changed forever. This summarizes the events that have occurred since that

day.

It was the 7th race at the Mountaineer Race Track in West Virginia, going into

the first turn and ‘‘Lil Bit of Rouge’’ was four wide and making her move. A jockey’s

wife ran over to me and said ‘‘Amy, Gary went down’’ and she had a panic look on

her face. Okay, I thought. Calm down. Give him a minute to catch his breath and

get to his feet. I walked outside to talk to the security guard, but he didn’t know

anything yet. A few more minutes had passed and Gary still hadn’t gotten to his

feet. I went inside to watch the replay and that’s when I saw all 110 pounds of my

husband being thrown head first into the dirt going 40 mph. I raced over to be with

him. By this time, though, they were loading him into the ambulance. I rode in the

front seat. I heard my husband say, ‘‘No Sir, I can’t feel that’’. That’s when tears

started streaming down my face. Never did it enter my mind that Gary wouldn’t

be covered for these medical services. It wasn’t even a concern, since I knew we had

insurance that we paid into and that there was also a catastrophic policy in place

for the jockeys.

After being at the local hospital for several hours, Gary was transported by helicopter to the University of Pittsburgh Medical Center. It was there that I learned

my husband would never be able to walk again. In fact, they had to perform surgery

and place a metal rod in his neck just so he would be able to hold his head up.

My husband was diagnosed as a C6-C7 quadriplegic. He was at the University of

Pittsburgh Medical Center for 4 weeks, with bills that escalated to over $450,000.

We were in for the battle of our lives.

It was the first week in August 2004 when Mr. Albert Fiss, Vice President of the

Guild, came to see Gary in the ICU in Pittsburgh. Present at the time were myself,

Bonnie Birzer (my sister-in-law) and a family friend Pam Isbel. It was at this time

that Mr. Fiss informed us that the Guild could be of no help to Gary. He indicated

that the Guild had no money to help at all. He said, ‘‘You need to get a lawyer and

go after the racetrack’’. Bonnie asked if they could help us by using one of the

Guild’s lawyers. Mr. Fiss said no but they could recommend one in our area. I

thought to myself—here was a guy who is supposed to want nothing but the best

for the jockeys and, while my husband was fighting for his life, with ventilators sustaining him, running excessively high temperatures, being packed in ice around the

clock—and all he wants to know is how come I haven’t thought about suing the race

tracks? Wow. I just wanted to scream at him and say ‘‘do you not understand that

my husband is in there fighting for his life right now and we thought your organization was committed to helping jockeys and their families through tragedies like

this?’’ It was at this point that I realized from my conversation with Mr. Fiss that

Gary was not covered for an on-track injury and that the catastrophic policy was

no longer in existence. We were completely left with no coverage whatsoever.

The second week in August, Gary’s father came to be with Gary. That same week,

Mr. Johnnie Beech, a Guild Rep in the Iowa area, was at Prairie Meadows, a racetrack in Iowa, and was talking to Gary’s mother (however, he was not aware she

was his mother at the time). She asked him how he was planning to help Gary

Birzer. He replied ‘‘I have a meeting with his parents tonight to discuss it’’. Gary’s

mom said ‘‘Oh really? While his father is up in Pittsburgh with Gary and I am his

mother’’? So, what time is that meeting? Mr. Beech turned and walked out of the

jockey’s room.

The third week in August, Gary’s mom came up for a visit. Miss Kelly from Pittsburgh Medical said next week Gary will be ready to go to rehabilitation. You have

3 options: (1) the 11th floor here at this hospital, (2) Squirrel Hill, or (3) a nursing

home. Tears instantly started coming out of my eyes. I knew that Squirrel Hill

would not take Gary without insurance. My husband is only 29 years old and there

was no way I was going to send him to a nursing home. The 11th floor of the hospital was out of the question. He needed to be in a rehabilitation center where they

specialized in spinal cord injuries. He was already in deep depression and I could

not bear to go into his hospital room and tell him he could have gone to Squirrel

Hill, if he had insurance, but instead he had to settle for a nursing home or rehab

on the 11th floor of the hospital.

She suggested that we get an advocate. Mr. Joe Delong, a West Virginia state representative, was called. He used to be a jockey’s agent and his dad trains horses

at Mountaineer, so he knows Gary and Gary’s agent Jimmy Isbel very well. Joe

23

Delong sprung into action right away, speaking on our behalf, trying to find a way

for Gary to stay in Pennsylvania to get the therapy he desperately needed.

During these two weeks, phone calls were placed to Mr. Fiss from Jimmy Isbel,

Gary’s mom, Gary’s dad and myself. None of the phone calls were ever returned.

During this time, I also applied for help from the state of West Virginia but was

turned down on the spot. The lady who helped me said ‘‘Mrs. Birzer, you have too

many assets for us to be of assistance to you at this time. In the state of West Virginia, if you are over the age 21, acute rehabilitation is not provided.’’

Then, Miss Kelly came back to us and said that our story had really touched her

heart and that she had been working with the people from Squirrel Hill and they

agreed to take Gary for his first 4 weeks of therapy as a charity case. For the first

time since the accident, I cried tears of joy. Finally, I had some kind of hope to give

my husband.

Gary went to Squirrel Hill where he was teamed up with Randy, one of the best

therapists there. I started seeing my husband’s will to live. The first week was very

hard for Gary. Our 2-year-old daughter wanted nothing to do with her daddy because she was so afraid of the wheel chair. Although it broke his heart, he was determined to find a way to ease her fears. His chair had a horn on it, so he taught

her how to honk it. Soon she was warming up to the chair and coming around her

daddy again.

Randy told us that Gary could live completely independent but that it would take

hard work and determination. He told us a few success stories about other spinal

cord injured patients and I saw a change in my husband’s attitude. You see, Gary

felt that everything was stripped away from him—he went from being a successful

jockey to being someone who could no longer use the restroom, or roll over in bed,

or feed himself, or cook or hold his daughter. The bedsores were a constant worry

too. From his nipple line down he no longer could feel his body. He has the use of

his wrist flexor, but not his fingers. So picking up things was next to impossible.

And now there’s someone telling him that he can live completely independent with

a little hard work. This was huge!

The next few weeks they worked with Gary on transferring him in and out of his

wheelchair and in getting him stronger. However, the four charity weeks were coming to an end and we still had no response from Mr. Fiss on how the Guild could

help my husband. I was still calling his office and his cell phone, leaving message

after message, but still with no response. I was simply asking for any help with his

rahab at Squirrel Hill, or maybe a wheelchair or anything would be greatly appreciated. Then Gary decided to call him and Mr. Fiss finally returned the call. Albert

informed Gary that whatever he needed, the Guild would take care of it. Gary asked

about 4 more weeks of rehab and a wheelchair and Mr. Fiss agreed that he would

take care of that also. He just needed the name of the person to talk to make the

arrangements. Gary told him to speak with Joyce Watson, from Admissions. Ms.

Watson spoke with Mr. Fiss and when she came back later into Gary’s room, she

was all smiles saying that Mr. Fiss agreed that the Guild would pay for him to stay

there and take care of any of his needs. Again, tears of joy rolled down my face.

I remember saying ‘‘See, Baby, things are going to be okay’’. Just don’t give up. I

remember driving home that evening calling everyone and telling them that the

Guild is going to help Gary and he gets to stay at Squirrel Hill.

Unfortunately, we soon learned that this was just another lie from Mr. Fiss. He

went back on his word. I tried calling him by phone again, and when I finally

reached him, I asked, ‘‘Why won’t you help my husband’’? Mr. Fiss said, ‘‘Try to understand. Horseracing is a billion dollar industry. Jockeys should not be paying for

their own insurance and we are using your husband as a ‘guinea pig’ to make a

statement.’’ I immediately broke down, raising my voice and fighting back the tears.

Again I stated: ‘‘Gary needs the Guild’s help. What about the Endowment Fund?

Can you use that to help him?’’ Mr. Fiss said he would have to talk to the Board

on Monday, as they are closed on weekends.

I was so distraught over what to do. Alex, Gary’s brother and also a jockey and

member of the Guild told me that Dave Shepard, a high member of the Guild, is

a family friend and thinks of Gary like a son. Dave was there when Gary rode his

first race. He said that Dave was going to take care of things and there is no way

was he going to let his little brother move to that facility. It’s all part of a plan

and not to worry.

I felt like I had to do something more so I started talking to other jockeys and

their girlfriends. That’s when I learned that Larry Saumell and Darrell Haire had

been down at the track, telling everyone that the Guild is helping Gary Birzer. I

became upset, again knowing that they were lying to these jockeys. I had tears in

my eyes and looked at all the riders and pleaded with them to listen to me. I said,

‘‘Please, listen—if you go down during a race, the Guild will not help you!’’ They

24

all looked at me with disbelief. I told them that they better pray to God that they

don’t go down tonight, because then they will learn the truth about the Guild.

The Guild reps went back to the track on Monday, September 13th around so everyone can hear what they have to say. I arrived at the track at 6:00 with Mr. Joe

Delong, Dan Taylor, my lawyer at the time, and two of my girl friends. Larry

Saumell and Darrell Haire showed up around 7:00. They were talking to Chad Murphy and all three came over to me and asked me what the problem was. Again, with

tears in my eyes, I simply asked the question again ‘‘why aren’t you helping my husband? He is a jockey and a member of the Jockey’s Guild. Why do you keep telling

the jockeys that you are helping us when you’re not’’. They said that I was angry

at the wrong organization. They said they had four lawyers working for Gary. I was

shocked to hear this—I said ‘‘what four lawyers’’. This was the first that I heard

of this. Mr. Haire also kept reassuring me that they are paying for Gary’s rehab.

They said the Guild is going to cut a check for $15,000 so Gary can stay at Squirrel

Hill. Dan Taylor immediately called Mr. Fiss to confirm the $15,000 for Gary’s

rehab. Mr. Fiss said that the family was misinformed and that the Guild was NOT

paying for his continued rehab. Mr. Taylor informed Mr. Fiss that he better get his

‘‘boys’’ in line, because they are telling the jockeys and Mrs. Birzer that a check will

be cut to be used for Squirrel Hill.

When we walked back into the jocks room, I emotionally stated, for all to hear,

that the Guild was indeed, NOT paying for Gary’s rehab and that he is being moved

to a state facility in West Virginia. Mr. Haire called Mr. Fiss and told him he needed to get down there right away. They then moved out of the jocks room to the

upper offices, as the jockeys were getting upset. They then asked me if I had asked

the racetrack for help and I replied that I had. Rosemary, who I talked to at the

track, said she had talked to her legal folks and said they had no money to help

my husband. They offered to go with me to talk to them again, and I declined. They

decided to have another meeting with the jockeys, but advised that I should not attend because of my emotional state.

The next day Larry Saumell and Darrell Haire went to Squirrel Hill with me to

see Gary. They asked me about the ‘‘guinea pig’’ comment and apologized for Mr.

Fiss making that statement. When we arrived, we went to talk to Joyce and they

informed her that they were going to be cutting a check for $15,000 to pay for the

additional 4 weeks of rehab. My case manager at that time, Melissa, also spoke with

them and they discussed the facility in West Virginia. They asked Gary that if they

paid for an apartment for his wife in West Virginia, would he be willing to go there.

He said that he needed to stay at Squirrel Hill, as it was one of the best rehab centers for spinal cord injuries. After Larry and Darrell left, Gary again called his

brother Alex, crying, telling him that they are going to move him down to the state

facility. Alex was upset, because the Guild reassured him that Gary would not be

moved.

The next day Mr. Fiss came into town and we had a meeting with the hospital

staff. Mr. Fiss and Darrell rode with me and during the entire ride. They kept reassuring me that they were not moving Gary. Darrell asked me about the state facility

in West Virginia. I told him that it was a step up from a nursing home and nothing

compared to Squirrel Hill. When we got to the meeting, Mr. Fiss never offered any

money. In fact, the discussion completely went in the opposite direction. He was

pushing for Gary to go to West Virginia. Gary said that he did not want to get on

Medicaid and go to a state facility. Squirrel Hill is where he felt he needed to stay.

The specialist said that Gary could eventually lead a normal life if he continues to

work hard and he should not have to give everything up that he’s worked hard for

just to be on Medicaid and go to a state facility.

Our battle to keep Gary at Squirrel Hill was lost and he was soon to be moved.

The West Virginia institution agreed to take Gary without insurance or Medicaid.

They said he needed to be transported by ambulance and that would cost $1500.

Mr. Fiss agreed that the Guild would pay for that bill.

The day before Gary was to be moved, Dr. Gertmenian and Mr. Fiss came back

to see Gary. Dr. Gertmenian began telling me about his daughter who is in a wheelchair and how stressful it is. He went on to say that I am going to need all the

help and support from family and friends, with a 2-year old daughter and a husband

in this condition, and that it was going to be tough on me. He remembered how his

wife cried and cried over what happened to their daughter and how helpless he felt

because there was nothing he could do. He went on to say that he knows what it’s

like to be in my shoes and how hard he knows it’s going to be for me. He said, ‘‘I

need the industry to think we have no money’’ but that he knows people in high

places and from time to time he would be sending me money. He also said he was

going to give me his ‘‘bedside number’’ and that if I needed anything, to just call

him. I became boiling mad at this point and thought ‘‘how dare he discuss his situaVerDate 11-MAY-2000 09:27 Nov 28, 2005 Jkt 000000 PO 00000 Frm 00032 Fmt 6633 Sfmt 6621 24255.TXT HCOM1 PsN: HCOM1
25

tion with me that was so far removed from what I was going through’’. Since July

20th, I have been begging for help and in return I have been given the run around

and told nothing but lies. The only thing he has done for my husband is make a

spectacle out of him and convinced all the riders that Gary Birzer is going to help

change the industry. The only thing Gary and my family got was the short end of

the stick and how dare he say that he knows what it’s like to be in my shoes. I

got up and walked out of the room, as I could listen to no more.

Gary ended up being transported to the Institute of West Virginia on September

20, 2004. They agreed to take him without insurance and without Medicaid. I was

grateful that they took him, but I can’t stress enough the strain it put on my family

and my daughter. I had to stay in a hotel room near the facility and could no longer

be with my daughter. It was the hardest thing for me to leave her as she was

screaming for her mommy.

Gary was in the West Virginia facility when I received a call from Dr. Gertmenian

asking me if I was going to sue the racetrack. I told him that the track was building

a ramp at our home so Gary could get into the house and they were also going to

hold a benefit dinner for him. I told him I couldn’t go after the track right now because they were the only ones helping at this point and we desperately needed help.

His remark to me was ‘‘if you let them buy you for a couple hundred thousand dollars, then there’s nothing further I can help you with. If Gary wants to talk, he can

call me.’’ And then he hung up

Once we were settled in the rehab center, we soon learned of the lack of experience and knowledge that they had about spinal cord injuries. It was a huge setback

from where he was. It was a nightmare as we watched them try to care for Gary.

I asked them one day as to why Gary’s hands were not washed and their reply to

me was ‘‘we thought it was build up from horseback riding’’. They simply didn’t

know how to care for his skin on his hands as a spinal cored injured patient. Also,

instead of working with Gary on transferring him in and out of bed, they simply

picked him up to move him. All the hard work teaching him to transfer was for

nothing, as they did not continue the same therapy. Even when he needed his shower—the two aides just manhandled him and didn’t try working with him to bathe

himself so he could be more independent. I asked them if they could just try to assist Gary in transferring himself from the bed to his chair and they agreed to try.

However, because of their lack of knowledge of how to transfer a patient, they almost dropped him. Thank goodness I was there, as he would have been on the floor.

The doctors were overmedicating him and the therapists were not well educated on

spinal cord injuries. Gary got a bad staph infection and they had to quarantine him

to a room by himself. They said he had to stay in bed and get turned every 2 hours

to prevent bedsores. Gary ended up getting a very bad, very large bed sore. I asked

how he got that, and they indicated that they were short staffed over the weekend

and he didn’t get turned as much as he should. They apologized. Gary kept losing

weight and went down to 94 pounds, and depression began setting in. And this was

the very rehab center that the Guild told the jockeys and my family was one of the

best places that Gary could be.

In October, a few weeks prior to Gary’s move to Cincinnati, Dave Shepard visited

Gary at the West Virginia facility. He informed me that the ‘‘war has begun’’. He

was referring to the whole insurance issue between riders and racetracks. This was

also soon after the incident where Shane Sellers was removed from Churchill Downs

in handcuffs. He asked me again if we were going to sue Mountaineer. I said ‘‘no’’,

not at this time. He promised that they were going to take care of Gary and not

let him slip through the cracks and that he has discussed this with Dr. Gertmenian.

Gary was losing his will to live and something needed to be done. We decided that

we needed to move Gary out of West Virginia and back home to Cincinnati to be

with family who wanted to help us. With many phone calls made by my family and

much media attention, the Guild paid $15,000 for a wheelchair-accessible van and

$9,000 for one year’s rent for an apartment in Cincinnati. West Virginia agreed to

pay for Gary’s wheelchair and a shower chair. We registered Gary at Drake, a wellknown rehabilitation facility in Cincinnati as outpatient, as they would not take him

in-patient with no insurance. We secured a nurse to come into the home to help

with Gary’s medical needs the first few weeks, but had to discontinue that service

as it was extremely expensive.

We are still living in an apartment in Cincinnati and have finally, after 6 months

of effort, been approved for Ohio Medicaid. Gary can no longer work, and because

I am his soul caregiver, I also cannot work outside the home. We are currently living on Social Security, which barely pays our bills. Our medical expenses have accumulated to over $500,000, which we cannot begin to pay back. The Guild has not

done anything further to help us.

26

Mr. WHITFIELD. Gary, you had mentioned that you had been a

jockey for a number of years. Why did you actually belong to the

Jockeys’ Guild?

Mr. GARY BIRZER. I talked to jockey Dean Kuntz and Dana Cox

about getting family insurance; and they told me that, when I was

single, that, as just a single person, that the Guild was more or

less for family in case I get hurt and everything. So 6 months before I got—a year before I got married, I joined as a small member,

and then 6 months prior to that I became a full member because

it takes a little bit of time for it to kick on in.

Mr. WHITFIELD. Did you pay a hundred dollars every year plus

X dollars——

Mr. GARY BIRZER. Yearly fee. A hundred dollars a yearly fee to

keep in member mount——

Mr. WHITFIELD. So for every time you rode a horse, a fee would

be paid to the Jockeys’ Guild; is that correct?

Mr. GARY BIRZER. Yes, sir.

Mr. WHITFIELD. And would it be accurate to say that one of the

benefits of your doing that was that you would have insurance for

on-track accidents; is that correct?

Mr. GARY BIRZER. Yes, sir.

Mr. WHITFIELD. And did you ever receive notification from the

Jockeys’ Guild by mail or in person or by any means that the catastrophic on-track coverage that you thought you had had been canceled or had lapsed?

Mr. GARY BIRZER. No, sir.

Mr. WHITFIELD. So you never received any notification whatsoever, even though you were paying the annual dues and you were

paying the per mount fees.

Mr. GARY BIRZER. No, sir.

Mr. WHITFIELD. So it must have been quite a shock to you and

your family when you discovered that you didn’t have any insurance.

Mr. GARY BIRZER. Quite a shock.

Mr. WHITFIELD. Now you know Mr. Fiss, in his testimony, talks

about that every jockey, as a result of a meeting in Austin, Texas,

when a decision was made to allow this policy to lapse, that all the

jockeys were given notice that they no longer had insurance coverage. Do you and Amy still say you were not aware of it; is that

correct?

Mr. GARY BIRZER. I was not aware of that.

Mr. WHITFIELD. What about you, Amy? Did you know about it?

Mrs. AMY BIRZER. [Nodded in the negative.]

Mr. WHITFIELD. And I am sure that your friends who are jockeys

and your acquaintances who you socialize with, did you ever hear

any of the other jockeys talking about, oh, we just lost our on-track

coverage?

Mr. GARY BIRZER. No, sir.

Mrs. AMY BIRZER. No, sir.

Mr. WHITFIELD. Now one of the statements that you made during

your testimony struck me, and I want to make sure that I did not

hear this incorrectly. I have read it myself, but I just find it a little

bit difficult to believe. In here, you said that Mr. Fiss made the

27

statement that jockeys should not be paying their own insurance,

and we are going to use your husband as a guinea pig.

Mrs. AMY BIRZER. Yes, sir.

Mr. WHITFIELD. Is that a statement he actually made?

Mrs. AMY BIRZER. Yes, sir.

Mr. WHITFIELD. He said that to you?

Mrs. AMY BIRZER. On the phone, yes, sir.

Mr. WHITFIELD. Now what did—you must have been shocked at

that statement.

Mrs. AMY BIRZER. I became very angry.

Mr. WHITFIELD. Now, you know, it is one thing—we can talk

about the macroissues here of whose responsibility is it for insurance coverage for jockeys, but when you have jockeys that are paying the annual fee, paying the per mount fee and then not receive

any notification that they do not have insurance and then suffer a

permanently disabling injury where you are paralyzed and have no

insurance and then, on top of that, to be told that we’re using you

as a guinea pig—I mean, I have great difficulty believing that anyone who professes to have compassion or interest in the jockey and

their welfare would make a statement like that. And I did notice

that one of the mission statements of the Jockeys’ Guild indicates

that one of their primary concerns is welfare for the jockey.

Now do either one of you feel like that the welfare of the jockey

was at the most important priority of the Jockeys’ Guild?

Mrs. AMY BIRZER. No, sir.

Mr. GARY BIRZER. No, sir.

Mr. WHITFIELD. It almost appears to me that it was the least important thing. Would you agree with that?

Mr. GARY BIRZER. Yes, sir.

Mrs. AMY BIRZER. Yes, sir.

Mr. WHITFIELD. Now, I know—I mean, I don’t know, and I can’t

imagine what you have been through, all the medical procedures.

You have talked about being packed in ice. And you wanted to stay

at Squirrel Hill, which was the best hospital for this problem in the

country, it is my understanding; and had you had that full policy

you would maybe have had an opportunity to stay there. But to go

through everything that you have gone through, just the medical

procedures alone—and from everything that’s been said in your testimony, I got the impression that people were lying—I mean,

Gertmenian was lying, Fiss was lying, representatives were lying,

and then they were changing their mind and doing this and they

were flip-flopping all over the place. Is that an adequate description of your experience with them?

Mrs. AMY BIRZER. Yes, sir.

Mr. GARY BIRZER. Yes, sir.

Mr. WHITFIELD. Now, you did indicate that the Guild finally

agreed to pay your ambulance bill, is that correct, to move you

from Squirrel Hill to West Virginia? Did they pay that?

Mrs. AMY BIRZER. Yes, sir.

Mr. WHITFIELD. Okay. And then you decided to move to Cincinnati because you wanted to be closer to your parents or have

some more family support. And did they help pay for an apartment

there; is that correct?

Mrs. AMY BIRZER. Yes, sir, 1 year’s rent.

28

Mr. WHITFIELD. One year’s rent. How much was that?

Mrs. AMY BIRZER. $9,000.

Mr. WHITFIELD. And did they pay for anything else?

Mrs. AMY BIRZER. The van, the wheelchair accessible van, that

was $15,000.

Mr. WHITFIELD. And you have that now.

Mrs. AMY BIRZER. Yes, sir.

Mr. WHITFIELD. Now, your only income at this point in your life

is what?

Mrs. AMY BIRZER. We get Social Security, and we also do get

from the Guild—they pay for disabled riders. We do receive a check

from them.

Mr. WHITFIELD. Now is that from the so-called Disabled Jockeys’

Fund——

Mrs. AMY BIRZER. I am not quite sure.

Mr. WHITFIELD. [continuing] or is that from the health and welfare fund, or is that from the operating fund, or is that from some

other fund, or do you know?

Mrs. AMY BIRZER. I am not quite sure where it comes from.

Mr. WHITFIELD. Okay. So you have Social Security. And how

much do you owe hospitals right now in outstanding medical bills?

Mrs. AMY BIRZER. Over $500,000.

Mr. WHITFIELD. Over $500,000. And is there efforts being made

by the hospitals or the healthcare providers to collect that money

from you at all?

Mrs. AMY BIRZER. Yes.

Mr. WHITFIELD. So you’re receiving letters and receiving bills and

they expect to be paid.

Mrs. AMY BIRZER. Yes. Excuse me, could I please say one more

thing?

Mr. WHITFIELD. Yes.

Mrs. AMY BIRZER. We would just like to take this opportunity to

thank all the jockeys, the foundations, everyone who has helped us

through this past year. It has been amazing the prayers and the

support, so we just want to make sure everyone knows we do appreciate the help and the outpour of love that we have been given.

Mr. WHITFIELD. So a lot of jockeys who face the same challenges

and experiences that your husband faced on the racetrack, they

have come to your assistance in some way?

Mrs. AMY BIRZER. Oh, yes.

Mr. WHITFIELD. Providing some support. Well, that is a real testament to the jockeys individually that are doing that, and we appreciate that.

Well, I have no further questions at this time; and I would yield

to the gentleman from Michigan, Mr. Stupak.

Mr. STUPAK. Thank you, Mr. Chairman; and thank you both for

being here today and your testimony.

Gary, when you became a full member of the Jockeys’ Guild, did

you receive any kind of insurance policy, insurance card, disability

policy, anything?

Mr. GARY BIRZER. Yes, sir. They mail you a handbook and a card.

Mr. STUPAK. The handbook and card, is that just for your membership in this——

Mr. GARY BIRZER. Yes, sir.

29

Mr. STUPAK. Did they mail you anything concerning insurance

policies, disability policies?

Mr. GARY BIRZER. Since the——

Mr. STUPAK. No, once you joined, not at the time of your accident.

Mr. GARY BIRZER. I believe, yes, sir.

Mr. STUPAK. Okay. Did you review that policy or anything? Were

you aware of any expiration dates on it?

Mr. GARY BIRZER. It had no expiration dates on it that I believe.

Mr. STUPAK. Was this policy a copy of a policy that you received

in your name or was it in the Jockey Guild’s name?

Mr. GARY BIRZER. I’m not sure about that one.

Mr. STUPAK. Do you still have those documents?

Mr. GARY BIRZER. They are packed away somewhere.

Mr. STUPAK. So you would have them. They are just packed away

somewhere.

Mr. GARY BIRZER. Yes.

Mr. STUPAK. Thanks. What was your understanding—once you

became a full member, what was your understanding of the benefits, if you will, that you were entitled to receive?

Mr. GARY BIRZER. I can’t remember at that time what the benefits were when I first joined the Guild.

Mr. STUPAK. Prior to your injury in the summer of 2004, what

was your understanding—before you got on that horse to ride that

day, what was your understanding of the benefits you would receive if anything happened to you?

Mr. GARY BIRZER. That my family would be taken care of with

the catastrophic insurance.

Mr. STUPAK. Okay. With the catastrophic insurance. And what

was your understanding catastrophic insurance would cover?

Mr. GARY BIRZER. I would have to look over the paperwork to

make sure.

Mr. STUPAK. But you certainly expected it to take care of your

medical bills?

Mr. GARY BIRZER. Oh, yes.

Mr. STUPAK. That if you had to have any type of adaptive living

devices for home or for you, was it your understanding that that

would be taken care of?

Mr. GARY BIRZER. Yes, sir. I knew I would have to write a little

bullet panel to ask for assistance for supplies and everything, and

they would give it to me.

Mr. STUPAK. Was it your understanding you would have disability income coming into your home?

Mr. GARY BIRZER. Yes, sir.

Mr. STUPAK. And I take it you are receiving some disability income from the Jockey Endowment Fund?

Mr. GARY BIRZER. I’m not sure where that money is coming from.

Mr. STUPAK. But is it my—Amy, is it correct to say that you are

receiving some income from—is it from the Endowment Fund?

Mrs. AMY BIRZER. It’s from the Jockeys’ Guild. I’m not sure

where it is coming from, but we do receive a check from them.

Mr. STUPAK. If you don’t mind me asking, how much is that a

month?

30

Mrs. AMY BIRZER. Right now, it is still weekly, and it is $200 a

week.

Mr. STUPAK. $200 a week?

Mrs. AMY BIRZER. Yes.

Mr. STUPAK. Okay. Gary, prior to your injury, did you have any

knowledge of any other jockeys that were injured and were not

being taken care of by the Guild?

Mr. GARY BIRZER. No, sir.

Mr. STUPAK. Do you have any knowledge now, after your injury,

of any jockeys being injured and not being taken care of by the

Guild?

Mr. GARY BIRZER. I am sorry, sir, can you re-ask——

Mr. STUPAK. After your injury, do you have any knowledge of any

jockeys who have been injured and are not being taken care of by

the Guild?

Mr. GARY BIRZER. I haven’t followed horse racing that much

since my accident, sir.

Mr. STUPAK. Sure. Amy, are you aware of anyone who is not

being taken care of?

Mrs. AMY BIRZER. Not to my knowledge.

Mr. STUPAK. So to the best that we know, the only jockey who

you’re aware of—there may be others, but that you’re aware of—

would be Gary who is not being taken care of by the Guild.

Mrs. AMY BIRZER. Yes, sir.

Mr. STUPAK. Gary, can you think of any reason why they would

cancel your insurance? I take it from your testimony and the documents I’ve seen you’ve paid every time. You’ve paid your hundred

dollars. You paid your mount fees. You’ve paid everybody.

Mr. GARY BIRZER. Yes, sir.

Mr. STUPAK. Okay. Besides jockeys, who else pays into this Jockeys’ Guild? Do the racetrack owners? TV rights, things like this?

Mr. GARY BIRZER. I believe the racetrack used to give what they

called a—the racetracks do give money, I forgot what they called

it, but the racetracks do——

Mr. STUPAK. And this money the racetracks give would go to the

Guild.

Mr. GARY BIRZER. Yes, sir.

Mr. STUPAK. And is it your understanding that the specific purpose of that was to go into this catastrophic fund to help riders who

have been injured?

Mr. GARY BIRZER. Yes, sir.

Mr. STUPAK. When you ride—and when you rode, besides paying

your fee, who else did you have to pay?

Mr. GARY BIRZER. My agent, my valet.

Mr. STUPAK. Your agent and your valet. What was a typical payment for a ride? What would you get paid if you rode?

Mr. GARY BIRZER. At the time I got hurt, they were giving me

$55 per mount.

Mr. STUPAK. $55. And how much went to the Guild?

Mr. GARY BIRZER. $10.

Mr. STUPAK. And how much for your agent?

Mr. GARY BIRZER. 25 percent.

Mr. STUPAK. So 25 percent of $55, okay. And then your valet.

Mr. GARY BIRZER. My valet made 10 percent.

31

Mr. STUPAK. So there’s 35 percent plus 10. And I take it they

would take out taxes.

Mr. GARY BIRZER. Taxes, yes, sir.

Mr. STUPAK. So when you were done, what was the net income you had for a ride, if you will, on a $55 fee? What would you actually take home, if you can use that word, per ride?

Mr. GARY BIRZER. My wife would know more about that than I

did.

Mr. STUPAK. Amy, do you have any idea what it would be?

Mrs. AMY BIRZER. No.

Mr. STUPAK. It’s got go be less than 20 bucks, according to

my——

Mr. GARY BIRZER. We had a savings set up for my taxes. We

would always take out 25 percent for Federal and 5 percent for

State.

Mr. STUPAK. That didn’t leave you a lot left over, did it?

Mr. GARY BIRZER. No, sir.

Mr. STUPAK. There was a lot of, from your testimony, a lot of

comments from the Guild about suing the racetrack——

Mr. GARY BIRZER. Yes, sir.

Mr. STUPAK. [continuing] making a claim against the racetrack.

Was this Mountaineer Park that is located in the panhandle there

of West Virginia, around that area?

Mr. GARY BIRZER. Yes, sir, the Northwest panhandle.

Mr. STUPAK. Was that track known to have difficulties?

Mr. GARY BIRZER. Yes, sir.

Mr. STUPAK. What kind of difficulties that would put a jockey at

risk?

Mr. GARY BIRZER. The base of the racetrack.

Mr. STUPAK. Pardon?

Mr. GARY BIRZER. The base of the racetrack. It’s got holes in it.

Mr. STUPAK. Okay. Do you race up there during the wintertime,

too?

Mr. GARY BIRZER. Yes, sir.

Mr. STUPAK. So if people saw snowflakes fall before they opened

the gate, that is not unusual?

Mr. GARY BIRZER. No, sir.

Mr. STUPAK. Is it more dangerous to ride at, let’s say, night during the winter?

Mr. GARY BIRZER. Yeah, it’s colder. You’ve just got to take things

a little more easier.

Mr. STUPAK. Is it more difficult to make sure that the horses

maintain stable footing on those tracks?

Mr. GARY BIRZER. Yes, when it’s about, like, 10 degrees.

Mr. STUPAK. Do jockeys get together and try to make improvements or suggest improvements to the tracks?

Mr. GARY BIRZER. We can suggest to the track superintendent.

It is up to him if he does it or not.

Mr. STUPAK. What, really—being a jockey, you can control—at

least try to control the horse that you are racing. You had no leverage, then, to force change in conditions for the type of weather you

were riding?

Mr. GARY BIRZER. The management was very difficult to deal

with at that racetrack.

32

Mr. STUPAK. Does your Guild get involved in trying to leverage,

to make sure things are proper before you ride during winter conditions or just the condition of the track?

Mr. GARY BIRZER. They wouldn’t listen to anybody but themselves, the management of the racetrack.

Mr. STUPAK. So you are basically left to the mercy of your Guild

and the racetrack owners, operators?

Mr. GARY BIRZER. Yes, sir.

Mr. STUPAK. Thank you. I have no further questions. Thanks for

being here.

Mr. WHITFIELD. Thank you, Mr. Stupak.

I recognize Mr. Walden.

Mr. WALDEN. Thank you, Mr. Chairman.

Mr. Birzer and Mrs. Birzer, thank you for being here today. I

can’t begin to understand what you are going through or have gone

through or will, but we certainly appreciate your courage and your

conviction of coming and speaking out.

Has it—what has the reaction been from your former colleagues

about the injuries you’ve sustained and what you’ve had to go

through to sort of manage on your own?

Mr. GARY BIRZER. I am sorry, sir?

Mr. WALDEN. How have the other jockeys reacted to what you’ve

been through, not just injuries you have sustained, as awful as

they are, but how you have been treated by the Guild? Are there

people that say, well, you have should known the insurance policy

was canceled and it’s your own fault, or are people saying I had

no idea that we weren’t covered? What’s the reaction been?

Mr. GARY BIRZER. I’ve had more riders come up to me going, we

didn’t ourselves realize the catastrophic insurance was canceled.

Mr. WALDEN. Is that right?

Mr. GARY BIRZER. Yes, sir.

Mr. WALDEN. You have spoken out, both of you, quite eloquently

and boldly today. Did anybody ever try and tell you not to do that?

I mean, it seems like there was this legal strategy to pursue, and

I am very disturbed by the comments that somebody said that—

Mr. Fiss, I guess—you have testified said we’re going to treat you

as a guinea pig and go after this legal course of action. Have there

been others that have said, you know, you are going to be our example to get better benefits or something and just pursue the legal

course?

Mrs. AMY BIRZER. No, sir.

Mr. WALDEN. So Mr. Fiss is the only one who has made that argument?

Mrs. AMY BIRZER. About my husband being the guinea pig? Yes,

sir.

Mr. WALDEN. Right, and pursuing the legal, suing the track and

all that.

Mrs. AMY BIRZER. The Guild reps and the Guild have been persistent about us suing the racetrack.

Mr. WALDEN. Do you feel like they’ve been persistent to the point

of denying you other benefits, this leverage to get you to sue? Any

examples of that?

Mrs. AMY BIRZER. No, sir.

33

Mr. WALDEN. So you feel like—what happens when you walk out

of this hearing? What do you anticipate—what will the reaction be?

Mrs. AMY BIRZER. Reaction?

Mr. WALDEN. Of your friends in the Guild. Do you think what

you’ve said today will come as news to them?

Mrs. AMY BIRZER. No, sir.

Mr. WALDEN. Gary, do you have any comment along those lines?

Mr. GARY BIRZER. No.

Mr. WALDEN. Has there been any criticism of your being critical

of Dr. Gertmenian?

Mr. GARY BIRZER. No, sir.

Mr. WALDEN. Amy, have you had anybody come back and say

you shouldn’t be so critical of the Guild or Dr. Gertmenian?

Mrs. AMY BIRZER. Yes, sir.

Mr. WALDEN. Can you elaborate on that? What have people told

you?

Mrs. AMY BIRZER. That Gertmenian is indeed looking out for the

jockeys, that he has helped the Guild tremendously.

Mr. WALDEN. And is that before they know what’s happened to

you in your case or after you have explained to them what you’ve

gone through?

Mrs. AMY BIRZER. Both ways, before and then even after they

still insist that he’s the best thing that has happened to the jockeys.

Mr. WALDEN. To the Guild. All right.

Well, I noticed in a news story here that was in one of the publications that—it quoted—let me see if I can find it here in just a

second. It seemed to quote Dr. Gertmenian as saying he would help

you even if he had to take money out of his own pocket. Do you

remember that or seeing that?

Mrs. AMY BIRZER. Do I remember him stating that?

Mr. WALDEN. Saying that, or do you remember reading that?

Mrs. AMY BIRZER. I remember reading it, that he had said——

Mr. WALDEN. This is the quote—and, Mr. Chairman, this is out

of Sports Business Journal September 27, 2004, written by Liz

Mullen. It talks about how the Birzers have health insurance

through the Guild, but it does not cover on track accidents, he said.

Then there is this quote. It says, what I said to—and in parenthesis to Amy Birzer, parenthesis—was I will do everything I can,

and I will, if it has to come out of my own pocket, Gertmenian said.

‘‘I knew this day was coming and I told everyone this day was coming and now hell comes to pay.’’ So he said he would take money

out of his own pocket to help you if need be, but he never made

that commitment to you?

Mrs. AMY BIRZER. No, sir.

Mr. WALDEN. And did he ever take money out of his own pocket

to help you?

Mrs. AMY BIRZER. No, sir.

Mr. STUPAK. Mr. Chairman, if I may, can we have that document

entered into the record? We may need it for later examination of

a witness.

Mr. WHITFIELD. Without objection.

[The article follows:]

34

35

36

Mr. WALDEN. When you explained how unhelpful the Guild and

Dr. Gertmenian have been, what is Dr. Gertmenian’s response,

that you’re lying? What does he say?

Mrs. AMY BIRZER. I can never get in contact with him, I don’t

know what his response is to——

Mr. WALDEN. To the best of your recollection—and I realize that

you’ve been through a lot and so I understand—how many times

since the accident have you had an opportunity to talk to Dr.

Gertmenian?

Mrs. AMY BIRZER. Zero.

Mr. WALDEN. Zero?

Mrs. AMY BIRZER. Since his accident?

Mr. WALDEN. Since the accident.

Mrs. AMY BIRZER. I have talked to Gertmenian 2 or 3 times. I’m

sorry, I thought you meant since he’s been home.

Mr. WALDEN. Gary, when did you come home?

Mr. GARY BIRZER. November 18.

Mr. WALDEN. So since then there has been no follow-up from Dr.

Gertmenian?

Mrs. AMY BIRZER. No, sir.

Mr. WALDEN. What about from others that are in his employ at

the Guild?

Mrs. AMY BIRZER. We have been in contact with Dave Shepherd.

Mr. WALDEN. All right. Mr. Chairman, I thank you for having

these witnesses here today.

Thank you. It’s been most helpful in hearing your story, and I

wish you well with your recovery.

And, Mr. Chairman, with that, I yield back.

Mr. WHITFIELD. Ms. Schakowsky.

Ms. SCHAKOWSKY. Thank you, Mr. Chairman; and I really want

to thank you, Gary and Amy, for your testimony, so straightforward and simple and moving, I think, to everyone who would

hear it.

I wonder if, Gary, you are still getting any rehab assistance now,

if you are in any kind of therapy?

Mr. GARY BIRZER. Due to the jockey that donated for the Breeder’s Cup in 2004, I took that donation money and I am in an extensive program right now in Cincinnati.

Ms. SCHAKOWSKY. So the only way, though, that you’ve been able

now—and I’m so glad to hear that, that you are in a rehab program—has been because of the goodwill of a friend, someone who—

a jockey that gave money to you; is that right?

Mr. GARY BIRZER. Yes, ma’am.

Ms. SCHAKOWSKY. Amy, you said you’re the only caregiver for

Gary. Have you been able to get any training or assistance in how

best to do that? You had talked about the transferring and the—

I mean, you’re pretty small, too. I just wondered how that works

for you.

Mrs. AMY BIRZER. Yes. Before he left Squirrel Hill they were

showing me how to transfer him and how to take care of his medical needs.

Ms. SCHAKOWSKY. So you’re taking care of your—is it Robin?

Mrs. AMY BIRZER. Yes, ma’am.

Ms. SCHAKOWSKY. Your daughter. How is she doing?

37

Mrs. AMY BIRZER. Wonderful.

Ms. SCHAKOWSKY. And she and dad are doing fine together?

Mrs. AMY BIRZER. Absolutely.

Ms. SCHAKOWSKY. Great. How long will this money from the

Guild—you said it’s coming from the Guild. Do you know how long

that money is going to be coming?

Mrs. AMY BIRZER. I’ve been told up to 2 years, until he gets

Medicare, which is 24 months after he’s been on Social Security.

Then it will go down to a monthly payment. Right now, we get

weekly payments from the Guild.

Ms. SCHAKOWSKY. Right. And do you know—so that’s a year

from—about a year from now.

Mrs. AMY BIRZER. Yeah.

Ms. SCHAKOWSKY. And are you aware if the money that you will

then be getting from Medicare will then make up for that difference? Do you know how much money you are going to be getting?

Mrs. AMY BIRZER. No, ma’am.

Ms. SCHAKOWSKY. Do you feel that, Gary, that you lost time because you had to go—and capacity because you had to leave Squirrel Hill and go to West Virginia?

Mr. GARY BIRZER. Oh, yes, ma’am.

Ms. SCHAKOWSKY. And is that being made up for now by the

rehab that you’re in or is that time that was just lost?

Mr. GARY BIRZER. Time that’s been lost.

Ms. SCHAKOWSKY. What kind of things do you think might have

been different in your life if you had been able to stay at Squirrel

Hill?

Mr. GARY BIRZER. I would be further along right now. I would

be able—like Squirrel Hill told us that, with a lot of hard work,

that I would be able to walk, I would be able to transfer myself,

and I am just now starting to be able to transfer myself out of my

wheelchair onto a bed or a mat. And 90 percent of the time I still

need help transferring myself out of my wheelchair into my bed.

Ms. SCHAKOWSKY. So all of this was really pretty much of a

shock—obviously, the accident was, although hearing about the

track, it was certainly a—it sounds like it was very dangerous conditions. What was the response of the track superintendent? I understand that he was approached—the track was approached about

the dangerous conditions. What was their response to you when—

when you were at Mountaineer Park, was the track superintendent

approached about the dangerous track conditions?

Mr. GARY BIRZER. He always told us he could fix it.

Ms. SCHAKOWSKY. And did that ever happen?

Mr. GARY BIRZER. No, ma’am.

Ms. SCHAKOWSKY. Let me ask you what you think should be done

to make Mountaineer and other tracks that run at night in northern winter safer for jockeys and exercise riders.

Mr. GARY BIRZER. My personal opinion, they need to replace the

base in the racetrack. They need a new surface. The dirt there goes

like kitty litter when it comes back and hits you in the face. Horses

don’t run in the dirt that well, so you’ve got to kind of swing them

out a little bit more. Due to the ground, you don’t know where all

38

the holes are on the racetrack, and as the base gets used up more

and more it will gather more holes up.

Ms. SCHAKOWSKY. So there is no way that even the best that you

can do, that you can actually figure out where those holes might

be until you hit them.

Mr. GARY BIRZER. Correct.

Ms. SCHAKOWSKY. Well, there’s a lot of questions that are going

to need to be asked of the panels that are upcoming, but I think

that you’ve actually laid a very solid base for us, if you will, in telling us your story.

In my personal opinion, and I think what I am hearing from the

questions of this panel, we are very concerned about the fact that

people like you, Gary and Amy, would be left with really no safety

net under you, especially since it was your understanding that you

were paying for something that you simply did not get, that that

benefit was cut without your knowledge whatsoever and that, subsequently, were it not for the charity of others and—and all of us

appreciate that, too, and I appreciated your statement, Amy, the

thanks that you gave to people, the additional remarks you made—

that we ought to be able to do better than that, all of us, and that

would include the Guild.

So thank you very much for your testimony.

Mr. WHITFIELD. Thank you, Ms. Schakowsky.

Dr. Burgess.

Mr. BURGESS. Thank you.

I, too, want to thank our witnesses for being here today. I know

it wasn’t easy. I want to thank you for your testimony. I want to

thank you for providing the timeline in such clear detail.

I had a question about whether or not there were written copies

of the policy that you received, but I guess we actually have some

copies. Is this part of our record now?

Mr. WHITFIELD. Yes. It has not been entered. We have some

blanket policies of future—of prior years that was in force, but we

do not have this one entered yet.

Mr. BURGESS. Okay. But we have that policy? Well, I guess the

question I have is, are you still covered by the Guild?

Mr. GARY BIRZER. Yes, sir. I’m sorry, sir. What I meant is my

wife and my daughter are.

Mr. WHITFIELD. Dr. Burgess, there are two policies. There is an

on-track policy that the Birzers thought that was in effect was not

in effect. There is an off-track health policy for families that is in

effect.

Mr. BURGESS. Okay. I thank you for——

Mr. WHITFIELD. The last policy is tab 26 in your booklet.

Mr. BURGESS. Just when you described your startup with the

Guild, the retainer fee that you paid them and the cost per ride,

that actually seemed like a pretty low figure, and even when we

were up to the $10 per ride. Can you give me any idea what the

cost per month or what you paid per month or what you paid per

year for the insurance?

Mr. GARY BIRZER. When Dr. Gertmenian and Matrix Capital was

running the Guild, it was 560 a month.

39

Mr. BURGESS. That was your part of the premium? Did the track

contribute any part to that or it was all covered by your contributions?

Mr. GARY BIRZER. That was covered by my—I’m not sure.

Mr. BURGESS. Can you give me any idea how many people nationwide would be under this insurance? What sort of revenue

would they generate every year from the premiums that were gathered from the jockeys?

Mr. GARY BIRZER. I’m not sure, sir.

Mr. BURGESS. And I don’t really have a clear idea of that either.

Mr. WHITFIELD. Well, to date, Dr. Burgess—you can’t hold me to

this conclusion—but it’s in the neighborhood of 1,100 or 1,200 jockeys belong to the Jockeys’ Guild; and at one time the tracks were

contributing in the neighborhood of $2.2 million per year, in addition to what the jockeys were contributing through their dues or

through their individual mount fees.

Mr. BURGESS. So there is significant cash within the Guild itself

at this time. Is that a fair statement?

Mr. GARY BIRZER. Yes, sir.

Mr. BURGESS. Now, you’ve covered it a little bit, but just so I understand, you have been instructed—and, of course, you’re accompanied by what I consider is competent—I will wager as competent

counsel. You have been told to consider suing the track itself, and

you have described for us what the basis for that would be would

be the condition of the base at the track.

Mr. GARY BIRZER. Yes, sir.

Mr. BURGESS. Was this generally known before your accident,

about the condition at the base of the track?

Mr. GARY BIRZER. Yes, sir.

Mr. BURGESS. Did the jockeys discuss this amongst themselves?

Mr. GARY BIRZER. Yes, sir. You always know there are a couple

spots in the base that’s bad and everything, but they always

changed the track surface, but they never, ever patched up the

base or replaced the base or anything.

Mr. BURGESS. Well, just—the mental image you gave us of the

kitty litter scenario—and I can’t imagine running in kitty litter myself, let alone a horse in kitty litter. It doesn’t sound inherently

safe. But is this fairly typical for tracks around the country?

Mr. GARY BIRZER. No, sir.

Mr. BURGESS. Did the jockeys amongst themselves talk to the

track management about this is not a good surface?

Mr. GARY BIRZER. Yes, sir.

Mr. BURGESS. Why would you all not—and this is probably off

the mark, but why wouldn’t you all just say we are not going to

ride here until you fix this darn thing?

Mr. GARY BIRZER. The management at Mountaineer Park is very

difficult to deal with.

Mr. BURGESS. I appreciate that, but, of course, I expect jockeys

to be difficult to deal with if they got together.

Mr. GARY BIRZER. Basically she would come down there and tell

us to leave.

Mr. BURGESS. I see. And then they would find other jockeys to

ride?

Mr. GARY BIRZER. Yes, sir.

40

Mr. BURGESS. I don’t know if it’s fair to ask this, and your counsel may interrupt me, but are you at this time pursuing a claim

against the track?

Mr. GARY BIRZER. Not at this time.

Mr. BURGESS. I presume they’re watching the clock for you as far

as the statute of limitations on this endeavor?

Mr. GARY BIRZER. Yes, sir.

Mr. BURGESS. It sounds like the track may bear some culpability—I am not a lawyer—but just from what your description of

the situation is.

Well, what about do you think the Guild itself bears any responsibilities? Does the Guild itself have any culpability in what’s happened to you since July 2004?

Mr. GARY BIRZER. I thought I would just be covered with my insurance and everything.

Mr. BURGESS. Again, you’ve got counsel at your side. I presume

you’ve talked about it. Is there a claim against the Guild itself?

Mr. GARY BIRZER. We are trying to find out all the facts about

that.

Mr. BURGESS. Well, just from my read of the Guild’s financials

for 2001 and 2002, they went from $4 million in receipts in 2001

to $6 million in 2002. I mean, I don’t know what’s happened to

their financial since then, but it would seem to me that there is

probably a significant amount of money within the Guild that is

supposed to be available for just this type of injury that competent

counsel could help you recover, just my opinion, of course.

Do you have an idea of the financial health of the Guild today?

Mr. GARY BIRZER. No, sir.

Mr. BURGESS. Have you asked for that information?

Mr. GARY BIRZER. Every time somebody asks about the paperwork from the Guild they always get a runaround, sir, that I know

of. I’ve never gotten—if I asked for paperwork, it doesn’t come to

me.

Mr. BURGESS. You know, Mr. Chairman, I appreciate you having

this hearing. It seems to me so much of this really belongs in litigation rather than in a congressional hearing. I appreciate the facts

we are trying to uncover, but it sounds like we’re not to the end

of this story, yet, and I hope the outcome is ultimately successful

for you and your wife, sir.

So the other jockeys right now that are covered, are they still

covered by the Guild or has the Guild completely gone away?

Mr. GARY BIRZER. The jockeys that are still in the Guild, I don’t

know what they’re doing. They say they’re covered.

Mr. BURGESS. Well, again, horse racing is inherently dangerous,

I would presume that since July 2004 there has been some other

injury or claim against the Guild. Do you know whether or not that

has happened and whether or not that claim has been successful?

I mean, is the Guild just completely out of money at this point?

Mr. GARY BIRZER. I don’t know what’s going on.

Mr. BURGESS. Well, again, those are questions that, while I

would be interested in the answer, I think you and your counsel

would be significantly interested in the answer to those questions,

and I wish you luck in getting those things resolved.

41

I do thank both of you very much for being here today. I know

it wasn’t easy.

Mr. Birzer, I guess I would probably ask you, you have probably

been around horses all your life.

Mr. GARY BIRZER. Yes, sir.

Mr. BURGESS. Since your accident, have you been able to be

around horses at all or has that just pretty much been eliminated?

Mr. GARY BIRZER. No, sir. I got hooked up with a trainer I used

to ride for. She wound up quitting training and is running a riding

center in Cincinnati, Ohio. I decided that I wanted to try to ride

a horse again; and I called up the riding center, not knowing that

she was running it. When she found out that I was wanting to try

to ride and so she had gone ahead and called me back. And I have

been riding there off and on the whole summer. Every Saturday I

was riding a horse. And I wound up—I did get to go back to

Riverdowns on September 4, and I did wind up riding a horse there

at the grounds at Riverdowns.

Mr. BURGESS. Did your wife know about that? I assume you had

permission.

Thank you both very much for your testimony today. I yield

back, Mr. Chairman.

Mr. WHITFIELD. Thank you, Dr. Burgess.

At this time, I recognize Mrs. Blackburn for 10 minutes.

Mrs. BLACKBURN. Thank you, Mr. Chairman; and I want to

thank our witnesses so much for taking the time to be with us

today. We know it is not an easy day for you, and we do want to

thank you for the time and the effort that you’ve gone through to

be here with us today. It is important that we hear from you and

get your perspective on this issue.

Amy, I think I want to talk with you first, if I may. I want to

go back to your testimony, on page two of your testimony where

you are talking about Mr. Fiss coming in to see you and your sister-in-law, see you and Bonnie in August 2002, and then reading

Gary’s testimony. It seems like Mr. Fiss was telling Gary that they

were going to take care of him, but he was telling you to go sue

the racetrack. Am I right in reading these two testimonies?

Mrs. AMY BIRZER. Gary—when he first came to see us, he was

saying they could be of no assistance. Then, after Gary got to

Squirrel Hill and it became why aren’t you helping a jockey, he is

a member of the Guild, when Gary asked for help from Mr. Fiss,

then he replied they could help him.

Mrs. BLACKBURN. So basically, then, Mr. Fiss changed his story.

Mrs. AMY BIRZER. Yes, ma’am.

Mrs. BLACKBURN. Okay. I just wanted to be sure that I was following that. That was not clear to me.

So basically he said at first no help, then under pressure he

bowed and changed his story to say that they were going to help.

Mrs. AMY BIRZER. Yes, ma’am.

Mrs. BLACKBURN. And then he went back and changed his story

gain.

Mrs. AMY BIRZER. Yes, ma’am.

Mrs. BLACKBURN. That can’t give other members of the Guild

very much confidence in that Guild, can it?

Mrs. AMY BIRZER. I wouldn’t think so.

42

Mrs. BLACKBURN. I wouldn’t think so either. That would cause

me to have a lot of questions.

Gary, let me ask you, if I may, please, sir, do we currently know

how many jockeys are in the Guild?

Mr. GARY BIRZER. I don’t know the numbers.

Mrs. BLACKBURN. Okay. And then you were paying $10 a mount

and a hundred dollars a month to the Guild.

Mr. GARY BIRZER. A hundred dollars, a yearly fee.

Mrs. BLACKBURN. A hundred dollars a year. Excuse me, you’re

correct. Can you give me an idea of what the total amount was that

you paid into the Guild during your career? Do you have that figure?

Mr. GARY BIRZER. No, ma’am.

Mrs. BLACKBURN. Do you know how much it was on an annual

basis?

Mr. GARY BIRZER. Not off the top of my head. My wife might

know that.

Mrs. BLACKBURN. Amy.

Mrs. AMY BIRZER. He paid about around $64,000 into the Guild

throughout his career.

Mrs. BLACKBURN. So you paid in a total of $64,000 throughout

his career, and that was to cover all of your fees and all of your

insurance and the catastrophic care in case something were to be

needed.

Mrs. AMY BIRZER. Yes, ma’am.

Mrs. BLACKBURN. $64,000. And over what period of time did that

turn out to be? How many years did that turn out to be?

Mrs. AMY BIRZER. Seven years.

Mrs. BLACKBURN. Over a 7-year period of time, $64,000; that’s

pretty steep insurance, isn’t it?

Mrs. AMY BIRZER. Yes, ma’am.

Mrs. BLACKBURN. It certainly is.

Let me ask you this. Amy, what has happened now? What kind

of healthcare do you have or what kind of health insurance do you

have? Is the Guild still providing something? Are you all still covered by a continuing policy? Was there any provision for that?

Mrs. AMY BIRZER. Myself and my daughter, yes, ma’am, we are

still covered by the Jockeys’ Guild.

Mrs. BLACKBURN. You are still covered by the Jockeys’ Guild

with their insurance. All right.

And, Gary, you said you were second generation, so I assume

your dad was a jockey. Am I correct in that?

Mr. GARY BIRZER. Yes, ma’am.

Mrs. BLACKBURN. Do you have other family members that work

in the industry?

Mr. GARY BIRZER. Yes, ma’am. My brother rides racehorses, too.

Mrs. BLACKBURN. Okay. So it kind of goes when your family has

done something and been with an employer or part of a group, you

kind of develop that trust, right?

Mr. GARY BIRZER. Yes, ma’am.

Mrs. BLACKBURN. And you expect that if they have been there for

a period of time, they’re going to continue to be there, and it’s always sad when someone breaks that trust.

43

Now the other thing I want to know—and either of you to answer

this—how much did the Guild and the racetracks compensate you

for your injuries? Do we know what the monetary compensation is

on that?

Mrs. AMY BIRZER. I don’t understand.

Mrs. BLACKBURN. Say that one more time, please, Amy.

Mrs. AMY BIRZER. I don’t understand exactly what you’re asking.

Mrs. BLACKBURN. The Guild, when it came to paying all of the

medical bills, do you know how much they covered? What was the

total amount of the bills they covered?

Mrs. AMY BIRZER. The medical bills? Zero, ma’am.

Mrs. BLACKBURN. They covered zero of the medical bills. So your

$64,000 that you paid in bought you zero in health payments.

Mrs. AMY BIRZER. Yes, ma’am.

Mrs. BLACKBURN. In medical bill payments. All right. And then

the racetrack has paid you how much?

Mrs. AMY BIRZER. They’ve paid a hundred thousand dollars.

Mrs. BLACKBURN. A hundred thousand dollars from the racetrack. Okay. Total?

Mrs. AMY BIRZER. Yes, ma’am.

Mrs. BLACKBURN. And you don’t know what the total amount of

those bills, what is still outstanding.

Mrs. AMY BIRZER. Over $500,000.

Mrs. BLACKBURN. Over $500,000.

Mrs. BLACKBURN. All right. Gary, let me go back, if I may,

please, sir, to the testimony when you—you stated that you met

with Mr. Fiss and Dr. Gertmenian, and you talked about suing the

racetrack for your injuries, or they talked to you about suing the

racetrack. I think that’s the way it is in your testimony. Did either

of them ever mention that they had canceled the insurance?

Mr. GARY BIRZER. No, ma’am.

Mrs. BLACKBURN. So that never came up.

Mr. GARY BIRZER. No, ma’am. All they talked to me is about how

they wanted to sue Mountaineer Park.

Mrs. BLACKBURN. Okay. Do we know at this point if the—okay.

So they talked with you only about suing Mountaineer Park. They

never mentioned that the insurance policy had been canceled.

Mr. GARY BIRZER. No, ma’am.

Mrs. BLACKBURN. Okay. And when was it that you found out

that the insurance policy had been canceled?

Mr. GARY BIRZER. I can’t recall, I was being medicated.

Mrs. BLACKBURN. Okay. Amy, do you recall when you found out

for sure that that insurance policy had been canceled?

Mrs. AMY BIRZER. Yes, ma’am. It was the first meeting when Mr.

Albert Fiss came to see Gary.

Mrs. BLACKBURN. That August? That August meeting. Okay. And

that’s when you found out that it had been canceled. Before that

you had not received anything in writing.

Mrs. AMY BIRZER. No, ma’am.

Mrs. BLACKBURN. All right. Thank you both so much for your

time and for being here and for talking with us. We really appreciate that, and we wish you well.

Mrs. AMY BIRZER. Thank you.

Mr. WHITFIELD. Thank you, Mrs. Blackburn.

44

Mr. Birzer, thank you and Amy very much for being with us

today. We genuinely appreciate your testimony, and as I said in the

opening, we’re gathering facts. We’re trying to determine if there’s

some action that can be taken at the Federal level to address this

issue in the long term, and your testimony has been invaluable to

us, and we look forward to staying in touch with you. And, of

course, the record will be open for a number of days in the event

you all have any additional material that you would like to present.

Mr. WHITFIELD. So you’re dismissed at this time, and we will

now call up the second panel of witnesses. As we’re changing out

here, on the second panel we have a great group as well. We have

Mr. Jerry Bailey, who’s a professional jockey, Racing Hall of Fame.

I think he recently—I’m not even going to say because I’m not sure,

but he was a former Jockeys’ Guild president. In addition, we have

Mr. John Giovanni, who’s a former professional jockey and former

Jockeys’ Guild national manager. We have Mr. Pat Day, former

professional jockey, Racing Hall of Fame, and former Jockeys’

Guild president. We have Mr. Eddie King, professional jockey and

former Jockeys’ Guild treasurer. We have Mr. Gary Donahue, who’s

a permanently disabled jockey. We have Ms. Tomey-Jean Swan,

professional jockey and Co-vice Chair of the Jockeys’ Guild Board

of Directors. We have Mr. David Shepherd, professional jockey and

Chairman of the Jockeys’ Guild Board of Directors. We have Mr.

Robert Colton, who’s a professional exercise rider, former professional jockey and former member of the Jockeys’ Guild Board of Directors, and then we have Mr. Chris McCarron, former professional

jockey, Racing Hall of Fame, and former member of the Jockeys’

Guild Board of Directors.

So as you can see from this panel, we have a lot of expertise in

this area of the Jockey’s Guild and insurance and issues relating

to jockeys.

Now, some of you were here, and some of you were not here, but

I’d indicated to you that it is the policy of this committee that we

take all testimony under oath. And before we began, I wanted to

ask any of you do you have any objection to testifying under oath?

We’re waiting for Ms. Tomey-Jean Swan and waiting for Chris

McCarron. Everybody else is here. We’ll wait for just a few minutes

here.

Thank you, Mr. McCarron, very much for joining us. By video is

Ms. Tomey-Jean Swan, who I indicated is a professional jockey and

Co-vice Chair of the Jockeys’ Guild Board of Directors. Can you

hear me okay, Ms. Swan?

Ms. SWAN. Yes, I can. Can you hear me?

Mr. WHITFIELD. I can. Thank you.

As you’re aware, the committee is holding an investigative hearing, and, when doing so, we have the practice of taking testimony

under oath. Do any of you witnesses today have any objection to

testifying under oath?

Okay. Now, do any of you have attorneys with you? As you know,

it is the rules of the committee and the rules of the House that we

do allow people to have legal counsel with them when they testify.

Do any of you desire to be advised by counsel during your testimony today?

45

Mr. DAY. Yes, sir. Pat Day. Tim McCall is my legal counsel

today.

Mr. WHITFIELD. Mr. Pat Day has legal counsel with him.

Mr. Donahue.

Mr. KING. Mr. King. I’m represented by Mr. Allen Milstein.

Mr. WHITFIELD. Mr. Day, who is your legal counsel?

Mr. DAY. Tim McCall.

Mr. WHITFIELD. Okay. Now, do your legal counsel intend to testify?

Mr. MCCARRON. Chris McCarron. I’m being represented by

George Cohen.

Mr. WHITFIELD. Does Mr. Cohen intend to testify? No.

Mr. DONAHUE. I’m also represented by Mr. Milstein.

Mr. WHITFIELD. So he’s advising two of you. Okay. But the counsel is not going to be testifying, so in that case I would ask those

who can will rise and raise your right hand, and I will swear you

in.

[Witnesses sworn.]

Mr. WHITFIELD. Each of you is now under oath, and you may

give a 5-minute summary of your written statement. And, Mr. Bailey, we’ll begin with you.

TESTIMONY OF JERRY BAILEY, PROFESSIONAL JOCKEY, MEMBER, RACING HALL OF FAME, FORMER PRESIDENT, JOCKEYS’ GUILD; JOHN GIOVANNI, FORMER PROFESSIONAL

JOCKEY, FORMER NATIONAL MANAGER, JOCKEYS’ GUILD;

PAT DAY, FORMER PROFESSIONAL JOCKEY, MEMBER, RACING HALL OF FAME, FORMER PRESIDENT, JOCKEYS’ GUILD;

EDWIN L. KING, PROFESSIONAL JOCKEY, FORMER TREASURER, JOCKEYS’ GUILD; GARY DONAHUE, FORMER PROFESSIONAL JOCKEY; TOMEY-JEAN SWAN, PROFESSIONAL JOCKEY, CO-VICE CHAIRMAN, BOARD OF DIRECTORS, JOCKEYS’

GUILD; DAVID SHEPHERD, PROFESSIONAL JOCKEY, CHAIRMAN, BOARD OF DIRECTORS, JOCKEYS’ GUILD; ROBERT

COLTON, PROFESSIONAL EXERCISE RIDER, FORMER PROFESSIONAL JOCKEY, FORMER MEMBER, BOARD OF DIRECTORS, JOCKEYS’ GUILD; AND CHRIS McCARRON, FORMER

PROFESSIONAL JOCKEY, MEMBER, RACING HALL OF FAME,

FORMER MEMBER, BOARD OF DIRECTORS, JOCKEYS’ GUILD

Mr. BAILEY. Members of Congress, ladies and gentlemen, thank

you for allowing me to address you today. As you know, my name

is Jerry Bailey, and I’m a professional jockey in the thoroughbred

racing industry and have been for the past 31 years. Although I’m

a member of racing’s Hall of Fame and won numerous major races,

one of the most gratifying aspects has been times I was able to be

the voice of reason and a representative on behalf of the jockeys

across American.

I was an active member of the Guild for 29 years. During that

time I served both as vice president and president. The Jockeys’

Guild has traditionally been a social welfare organization, and

their primary purpose over the years has been to provide jockeys

in America with both health and on-track accident insurance, better and safer work conditions, as well as securing a fair and equitable pay scale.

46

The Guild was funded in most part by two mechanisms, one

being contributions by the jockeys themselves, and the second, the

annual moneys received from most racetracks in exchange for the

radio and television rights of the jockeys.

Because of the rising costs of health care over the years and the

fact that racetracks were unwilling to substantially increase their

annual payments to the Guild, it was inevitable that the Guild was

eventually going to be unable to afford the cost of both health care

and on-track accident insurance for its membership. The membership was told of the financial concerns at each annual meeting in

the late 1990’s. The financial advisers warned that the Guild’s investments, which had helped bridge the shortfall for several years,

would fail to be the solution in the event the stock market took a

downward turn of any great significance, and, of course, that indeed did occur in the late 2000’s.

As this economic downturn occurred, the Guild notified the membership that it could not afford to maintain its health insurance

plan. The Guild did, however, maintain the on-track accident insurance. In short, the Guild could not afford to provide both the ontrack accident and the health care insurance, so it chose the ontrack accident.

As news of the termination of the Guild insurance spread

throughout the jockey colony, rumors of fraud and mismanagement

were common, untrue but common. Those rumors were followed by

allegations by those people that were seeking a change in management. It is my understanding that to this date no evidence of any

wrongdoing by the former management was ever found.

In early of April 2001, there was a meeting at the Guild offices

in Lexington, Kentucky. The purpose of that meeting was for the

management team of the Guild headed by John Giovanni to answer

any questions that members might have concerning the allegations

of mismanagement or fraud. In attendance were myself; Pat Day,

who was president at the time; John Giovanni; Robert Colton; Mike

McCarthy; Tomey Swan; Tony Black via phone; and Chris

McCarron.

At the conclusion of that meeting, it seemed to me as though all

questions brought forth by McCarron, Colton and McCarthy were

answered to their satisfaction. Sometime after that meeting, however, McCarron was in the process of introducing a Dr. Gertmenian

to many Guild members across the country.

In June 2001, there was a special meeting requested of the Guild

executive board, of which I was a member. The purpose of that

meeting was to discuss the removal of John Giovanni from the position of national managing secretary. After several hours of discussion, there was a consensus that there was some action necessary;

however, as I remember, there was no vote taken. It is my understanding, though, that immediate lockdown of the Guild office took

place either late that night or early the next morning. I was unaware of the lockdown at the time, but in reflection I can only believe that Mr. McCarron, Mr. Colton, Mr. McCarthy and Dr.

Gertmenian were in concert on this takeover.

I do recall that of all the executive Board members on the aforementioned call, five of us, Pat Day, Tony Black, Dean Kutz, Larry

Melancon and myself, were opposed to Mr. Giovanni’s removal. At

47

some point during that conference call, the topic of who would replace Giovanni was discussed. The name of a Dr. Gertmenian was

introduced into the conversation. Dr. G was described as a close

personal friend of Mr. McCarron, a professor at Pepperdine University, and a wizard at negotiations.

During the ensuing weeks I contacted Dr. G to conduct an informal interview so I might be well versed of his qualifications or lack

thereof of the job of managing secretary of the Guild. I asked him

to provide me with a few references, to which he answered repeatedly that those references were confidential, and that under no circumstances would he comply with my request. At that moment I

began to distrust Dr. G.

Sometime thereafter I resigned from the executive Board as I felt

that I could not serve with someone I did not trust. It was then

that I knew I would eventually extract myself from an organization

that I had lived and breathed for 25 years. My objective then was

to find health insurance for my family and me, a mission that took

over a year. It was and still is very hard to obtain as a jockey.

When Dr. G took control of the Guild, he made a promise to restore the health insurance to the jockeys. He did that all right, but

he never notified me, still an active Guild member, that this new

policy failed to cover jockeys for on-track accident insurance as the

previous policy had, nor did he notify me that the on-track accident

policy that was purchased by John Giovanni in April 2001 had

lapsed. It is my understanding that there was never any formal notification of the lapse of that policy.

At that point I found it critical to obtain my own health insurance policy that would also cover me for on-track accidents. As soon

as I obtained that insurance, I resigned from the Guild. At that

point I became very distant from any Guild business.

To this day I truly hope that all the promises made to the jockeys from Dr. G come to fruition. Unfortunately over the past few

years that doesn’t seem to have happened. It is my humble opinion

that the jockeys have been treated like secondhand citizens by this

industry on many occasions. I also feel that we definitely do own

our media rights and should be fairly compensated for them when

used for profit by others. I also believe while we should be responsible for our own health insurance, we should not have to pay for

health insurance coverage while on the job.

I came to Washington today to make a difference. If we’re going

to help jockeys across America, we need to address the issue of insurance. In the area of on-track insurance, some type of national

program or policy needs to be explored. A national workman’s compensation policy would be a godsend. I have broken 21 bones in my

career, and I consider myself to be fortunate, fortunate in the sense

that I was injured in States that had workman’s compensation in

place or tracks that maintained an on-track accident insurance policy that went well beyond the $100,000 level. If 90 percent of the

jockeys in America were to sustain a catastrophic injury tomorrow

at a track that only insured them for $100,000, they would be

wiped out financially. It is my hope that here today with the help

of Congress we will begin the journey to find a solution to the insurance needs of all the jockeys across America.

48

I sincerely thank you for taking the time out of your busy schedules to address the concerns of jockeys and the thoroughbred industry. Even though I’m in the twilight of my career, the issues we’re

addressing today are very important to me and will have a huge

impact on an industry that contributes billions of dollars and

countless jobs to the economy of our country. Thank you.

[The prepared statement of Jerry Bailey follows:]

PREPARED STATEMENT OF JERRY BAILEY

Distinguished members of Congress, ladies and gentlemen, thank you for allowing

me to address you today.

As you know my name is Jerry Bailey, I am a professional jockey in the Thoroughbred Racing Industry, and have been for the past 31 years. Although I am a

member of Racing’s Hall of Fame, won numerous major races, and received many

prestigious awards, one of the most gratifying aspects of my career has been the

times in which I was able to be the voice of reason and a representative on behalf

of the jockey’s across America. As I said previously, I have been a Rider, not a Writer, so please bear with me.

In the next few minutes I would like to give you a brief overview of the situation

that most jockeys in America find themselves in today as I see it... how we got

here, some of the bumps in the road along the way and where we might be headed

if the situation remains status quo.

The Jockeys Guild has traditionally been a social welfare organization. Their primary purpose over the years has been to provide jockeys in America with both

health and on-track accident insurance, better and safer working conditions, as well

as securing a fair and equitable pay scale. I was an active member of the Guild from

1974 until 2003 at which time I resigned due to my extreme distrust of the new

management team headed by Dr. Wayne Gertmenian.

During the term of my membership, I served as a Regional Representative, followed by terms as Vice President of the Eastern Section, and ultimately President

of the Guild for 7 years. The Guild was funded in most part by two mechanisms.

One, being contributions by the jockeys themselves, jockeys would pay to the Guild

(in their name) a per mount fee. As years went by, the fee went from $2 to $8. The

majority of each per mount fee went to pay for the riders health insurance premium,

and the balance of the per mount fee paid for the expenditures of running the Guild,

(the split was 6/2 on an 8 dollar fee.) The more mounts ridden in a calendar year,

the more each rider would contribute to his, or her account. Once a jockey’s insurance premium was satisfied, the surplus was applied to less fortunate guild members’ premiums. In other words, the more fortunate would help the less fortunate.

The second means of funding the Guild, was the annual monies received from

most of the Racetracks in exchange for the radio and television rights of the jockeys.

Those rights are assigned to the Guild by each member when said member joins

the Guild. Because of the rising costs of health care over the years, and the fact

that Racetracks were unwilling to substantially increase their annual payments to

the Guild, it was inevitable that the Guild was eventually going to be unable to afford the costs of both the healthcare and on-track accident insurance for it’s membership.

The membership was told of the financial concerns at each annual meeting in the

late nineties. The Guild financial advisors warned that even though the Guild’s investments, (which helped bridge the shortfall for several years), would fail to be the

solution in the event the stock market took a downward turn of any great significance. Of course that did indeed occur in late 2000 and early 2001.

As this economic downturn occurred, the Guild notified the membership that since

it could not afford to maintain it’s health insurance plan, members would be placed

in a Cobra plan which could satisfy the insurance needs of the riders for 18 months.

During that time, each rider could obtain his own health insurance. The Guild did

however maintain the ‘‘ON-TRACK’’ accident insurance. That insurance provided

jockeys in states that did not have workman’s compensation, coverage from

$100,000 to $1,000,000 (by way of negotiation, the tracks provided the first $100,000

of insurance). In short, the Guild could not afford to provide BOTH the health AND

on-track accident insurance, so it chose the latter.

As the news of the termination of the health insurance spread through the jockey

colony, rumors of fraud, and mismanagement of Guild funds by management were

common.Untrue, but common.Those rumors were followed by allegations by some

49

that were seeking a change in management. It is my understanding that to this day,

no evidence of any wrongdoing was ever found.

In early April of 2001, there was a meeting at the Guild offices in Lexington, Kentucky.The purpose of that meeting was for the management team of the Guild,

headed by the National Managing Secretary John Giovanni to answer any questions

that members might have concerning the allegations of mismanagement of funds or

fraud. In attendance were myself, Pat Day, (president of the guild at that time),

John Giovanni, Robert Colton, Mike McCarthy, Tomey Swan, Tony Black, (via

phone), and Chris McCarron.

At the conclusion of that meeting, it seemed to me as though all questions

brought forth by McCarron, Colton, and McCarthy were answered to their satisfaction. Apparently that was not the case, because some time after that meeting, Mr.

McCarron was in the process of introducing a Dr.Wayne Gertmenian to many Guild

members across the country.

In June of 2001 there was a special meeting (via conference call) requested of the

Guild executive board (of which I was a member). The purpose of that meeting was

to discuss the removal of John Giovanni from the position of National Managing

Secretary. After several hours of discussion, there was a consensus that although

there was some action necessary, there was no vote taken.It is my understanding

that an immediate lock down of the Guild office took place either late that night

or early the next morning. I was unaware of the lock down at that time. In reflection, I can only believe that Mr. McCarron, Mr. Colton, Mr. McCarthy, and Dr.

Gertmenian were in concert on this take-over. I do recall that of all the executive

board members on the aforementioned conference call, Pat Day, Tony Black, Dean

Kutz, Larry Melancon and I were opposed to Mr. Giovanni’s removal.

At some point during that conference call, the topic of who would replace Giovanni

was discussed.The name of Dr. Gertmenian was introduced into the conversation.

This ‘‘Dr. G’’ was described as a close personal friend of Mr. McCarron, a professor

at Pepperdine University, and a wizard at negotiations, as he had worked for the

Nixon administration in that capacity. During the ensuing weeks, I contacted Dr.

G by way of a phone number Mr. McCarron had given me. The purpose of my call

was to conduct an informal interview of Dr. G so that I might be more well versed

as to his qualifications, or lack thereof, for the job of National Managing Secretary

of the Guild. (I felt an obligation to the membership to either endorse this man or

not).I asked Dr. G to provide me with a few references of previous employment, to

which he answered repeatedly that those references were confidential, and that

under no circumstances would he comply. At that moment, I began to distrust this

‘‘Dr. G’’.

Sometime thereafter I resigned from the executive board, as I felt that I could not

serve with someone I did not trust. It was then that I knew I would eventually extract myself from an organization that I had lived and breathed for over 25 years.

My objective then was to find health insurance for my family and me. A mission

that took over a year (it was, and is still very hard to obtain as a jockey).

In June of 2002, I had the occasion to learn that a jockey in Louisiana had been

injured on track, and was incurring bills of over $100,000. I found that hard to believe. I was sure that the Guild had maintained its insurance policy for track accidents in states that did not have workmens[’ comp. It just so happened that Dr. G

was at Belmont Park (where I was riding) that week, so I asked him if our on track

insurance policy was still in effect. He told me it was.Being distrustful of the man

already, I asked him the same question the next day, in a manner suggesting that

I knew differently. His answer this time was, that he checked it out and found that

the policy in question was cancelled by John Giovanni. He added that the Guild was

looking into restoring it. It is a matter of record that John Giovanni purchased said

policy on or about April 1st of 2001 (shortly before his ousting). Under Dr. G’s

watch, the policy was allowed to lapse one year later.

When Dr. G took control of the Guild, he made a promise to restore health insurance to the jockeys. He did that all right, but he never notified me, (still an active

Guild member), that this new policy failed to cover jockeys for on-track accidents

(as the previous policy had). Nor did he notify me that the on-track accident policy

that was purchased by John Giovanni in April of 2001, and was in effect for one

year had lapsed. It is my understanding that there was never any formal notification of the lapse of that policy.

At that point I found it critical to obtain my own health insurance policy, that

would also cover me for on track accidents.As soon as I obtained said insurance, I

resigned from the Guild. At that point I became very distant from any Guild business. To this very day, I truly hope that all the promises made to the jockeys from

Dr. G, come to fruition. Unfortunately, over the past few years that doesn’t seem

to have happened.

50

It is my humble opinion that jockeys have been treated like second hand citizens

by this industry on many occasions. I also feel that we definitely do own our media

rights, and should be fairly compensated for them when used for a profit by others.

I also believe that while we should be responsible for our own health insurance, we

should not have to pay for insurance coverage while ‘‘on the job.’’

I mentioned in my opening paragraph, the direction this industry might be headed if things remain status quo. In the area of ON TRACK insurance, some type of

national program or policy needs to be explored. A National Workman’s Compensation plan would be a Godsend. I have broken 21 bones in my career and I consider

myself to be very fortunate. Fortunate in the sense that I was injured in states that

had Workmen’s Comp in place or at tracks that maintained an ON TRACK insurance policy that went well beyond the $100,000 level. If 95% of the Jockeys in America were to sustain a catastrophic injury tomorrow, at a track that only insured

them for $100,000, they would be wiped out financially. It is my hope that here

today, with the help of Congress, we will begin the journey to find a solution to the

insurance needs of all Jockeys across America.

I sincerely thank you for taking the time out of your busy schedules, to address

the concerns of Jockeys in the Thoroughbred Industry. Even though I am in the twilight of my career, the issues we are addressing today are very important to me,

and will have a huge impact on an industry that contributes billions of dollars and

countless jobs to the economy of our Country. Thank you!

Mr. WHITFIELD. Mr. Bailey, thank you very much. We also hope

that from this testimony we can begin to go down that road to insure adequate health coverage for everyone.

Our next witness is Mr. Giovanni.

Mr. Giovanni, you are recognized for 5 minutes for your opening

statement.

TESTIMONY OF JOHN GIOVANNI

Mr. GIOVANNI. Thank you, Mr. Chairman, members of the subcommittee. My name is John Giovanni. I’m the former national

manager and secretary of the Jockeys’ Guild. Thank for the invitation to speak here today. I appreciate the opportunity, and I hope

my testimony may be helpful to you.

For the purpose of introduction, let me tell you that I am a

former jockey. I rode for approximately 20 years, and for all of

those years I was a member of the Jockeys’ Guild. For the last 13

years of my riding career, I served as director on the national

board, and upon retiring from the saddle, I was hired as a regional

manager serving in that capacity for 6 years.

In 1986, I was selected by a search committee from a group of

40-plus applicants to replace the retiring national manager Nick

Jemas. At the December Board of Directors meeting, I was unanimously elected to that position; took office on January 1, 1987. I

was reelected either unanimously or by overwhelming majority to

six more consecutive terms and served in that capacity for 14

years, until, along with my entire staff, I was ousted in June 2001.

Now, I’ll be the first to admit that we had plenty of work to do,

and there were areas for improvement, but the Guild management

had always been headed by a jockey, and in my written testimony

you will see under the management and leadership of this former

jockey, we accomplished much for the Guild and made great strides

for members’ health and welfare.

The Jockeys’ Guild was incorporated in New York in May 1940

as a 501(c)(4) social welfare organization. It was founded by a

group of the country’s most prominent riders, the goal in mind of

improving the quality of life for jockeys and their families. Their

51

foremost concern was the need for insurance coverage to provide

for their injuries.

By January 1941, an insurance plan underwritten by Lloyds of

London covering all jockeys for racing injuries with an accidental

death benefit of $5,000 in place at most major racing facilities.

Over the next 60 years the benefits increased. In the mid-1960’s,

by trading jockeys’ media rights, the Guild acquired the funding for

health insurance, and the original policy purchased was a $250,000

major medical plan. This plan paid for medical expenses for member jockeys who surpassed the cap on the on-track accident program and was incorporated into every ensuing health insurance

contract provided by the Jockeys’ Guild.

Union Labor Life Insurance Company, ULLICO, was the Jockeys’

Guild health insurer in 2000 and had been throughout much of the

1990’s. It was a very bad year, and there were a great many health

claims and several on-track injuries that went over the $100,000

mark. One track accident claim in particular was for over $600,000.

These high claims led to a 43 percent increase in premiums for the

2001 renewal. We were prepared for about a 20 percent increase

and, in fact, had received comparable increases in two previous

years, but 43 percent was devastating, and we could not afford it.

Through a series of meetings to address this problem, the Guild’s

executive committee directed me to renew the plan only in States

where the Guild received State funding, namely California and

Delaware. In all other States I was directed to make arrangements

for the membership to switch to COBRA for their health care benefits. Members could make payments directly to ULLICO and keep

their Guild health plan in place for another 18 months. In an effort

to help the membership better afford these expenses, Guild fees

were reduced from $8 to $3 per mount.

The executive committee also instructed me to find and secure a

catastrophic policy that covered members for on-track injuries. We

did that immediately and purchased a policy for $1 million per accident. This policy covered all Guild members who required coverage whenever they raced, in any jurisdiction that lacked worker’s

compensation. This policy was paid for 1 year in advance and was

effective April 1, 2001, through March 31, 2002. The members were

now guaranteed on-track medical coverage of at least $1 million.

Additionally, members in California and Delaware and the others

who opted for COBRA had family coverage. Because of the importance of these benefit changes, each member was notified well in

advance.

Mr. Chairman, I would like to emphasize that every single decision affecting the members or the direction of their Guild was authorized by the executive committee. We always advised the committee of the status of our financials and insurance and other

major issues, and the committee made the final call on how to proceed. I worked for them, not the other way around.

The Jockeys’ Guild was a democratic labor organization, held

regular elections of its Board of Directors every 2 years. I was

elected in 2000 for a 2-year term as national manager; however, at

the same time as our health care crisis, a small group of jockeys

led by Chris McCarron, who had a long-standing relationship with

Wayne Gertmenian, decided to capitalize on the health care emerVerDate 11-MAY-2000 09:27 Nov 28, 2005 Jkt 000000 PO 00000 Frm 00059 Fmt 6633 Sfmt 6602 24255.TXT HCOM1 PsN: HCOM1
52

gency and hand over the Guild and its millions of dollars of assets

to Gertmenian and its company, Matrix Capital Associates.

I, along with my staff, was removed from office June 16, 2001,

6 months into my term. Since then I’ve watched in dismay as the

institution I served all of my adult life deteriorated into something

I could barely recognize. The Guild is no longer an effective voice

for jockeys and has abandoned its traditional role as their protectors. No longer is there a contract with the TRA, and no one can

be certain if there’s any on-track accident coverage, by whom it is

underwritten or how much coverage it provides. The health insurance plan is at least double the cost, yet disallows coverage for ontrack injuries.

Many tracks no long recognize the media rights agreement and

pay nothing to support member insurance benefits. Some horsemen’s bookkeepers do not even collect mount fees. The Guild now

faces antitrust litigation by one of the countries premier racing associations and several suits filed by members.

The Disabled Jockeys’ Fund is defunct, and there is at least one

permanently disabled member facing enormous medical bills who

had been left to fend for himself. The Guild financial information

is cloaked in mystery, and, while it has been subpoenaed before the

subcommittee, has not been forthcoming.

More than 60 years of progress made in funding ever-increasing

insurance benefits for the Guild’s members appears to have vanished. On behalf of those who fought so long and hard for these

basic needs, I ask why this occurred, who is responsible, and, most

importantly, how it may be restored. Thank you.

[The prepared statement of John Giovanni follows:]

PREPARED STATEMENT OF JOHN GIOVANNI

Good morning Mr. Chairman and members of the Subcommittee. I am John

Giovanni, former National Manager and Secretary of Jockeys’ Guild, Inc. Thank you

for the invitation to speak here today. I appreciate this opportunity and I hope my

testimony may be helpful to you.

For the purpose of introduction let me tell you that I am a former jockey. I rode

for approximately twenty years (September 2, 1961 to March 30, 1981) and for all

of those years I was a member of the Jockeys’ Guild. For most of those years I was

an active member on all the jockeys’ room committees at every racetrack where I

rode and for the last thirteen years of my riding career, I served as a director on

the national board. Upon retiring from the saddle I was hired as a regional manager

serving in that capacity for six years. Although originally assigned to the Maryland,

Delaware, West Virginia and Pennsylvania, within six months I was traveling the

entire country on Guild business. In 1986 I was selected by the Jockeys’ Guild

Search Committee from a group of forty plus applicants to replace the retiring National Manager Nick Jemas. At the December Board of Directors meeting that year

I was unanimously elected to the position and took office on January 1, 1987 to

serve a two year term. I was reelected either unanimously or by an overwhelming

majority to six more consecutive terms and served as the Jockeys’ Guild National

Manager and Secretary for fourteen years until, along with my entire staff, I was

ousted on June 16, 2001.

The Jockeys’ Guild was incorporated in New York in May of 1940 as a 501(c) 4

social welfare organization. It was founded by a group of the country’s most prominent riders with the goal of improving the quality of life for jockeys and their families. Before the Guild was formed a jockey colony had to deal with injuries, medical

emergencies and financial difficulties by passing the hat. The jockeys who had gave

to the jockeys in need.

To illustrate, in the 1930’s there were no ambulances, first aid rooms or doctors

on the grounds of a racetrack. If a rider was hurt he had to fend for himself. My

friend Sam Renick told me how he fell in a race at the old Jamaica Race Course

in New York in 1939. He suffered a compound fracture to his left leg and was taken

53

to the hospital by a member of the starting gate crew in an old pickup truck after

the last race. Sam considered himself lucky because at the time he was under contract to one of the most powerful stables in the industry and could afford to pay

his own medical bills. That incident however, was the last straw. Sam, Eddie

Arcaro, John Longden, Irving Anderson and a small group of jockeys riding in New

York went to work and founded the Jockeys’ Community Fund and Guild.

Among the first concerns for the new Guild was the need for insurance coverage

to provide for the expense of their injuries. They pressed hard and by January of

1941 an insurance plan covering jockeys for racing injuries and accidental death

was in place at most of the major racing facilities across the country. Lloyds of London underwrote the policy and it covered all jockeys, not just Guild members. Sadly,

the first benefit of $5000 was paid in February of that year to the family of Joseph

Giangasparo, a nonGuild member, who was killed at Hialeah Park in Florida.

Over the next 60 years, as a result of some difficult negotiations and bitter battles, the benefits increased. In the mid 1960 ’s by trading media rights to the racing

associations the Guild acquired the funding for health insurance. The original

health plan was with Blue Cross Blue Shield of Rockford Illinois and it covered all

Guild members and their dependents. The plan maximum was $250,000 per insured

and it included a provision to pay medical expenses for a member jockey who was

hurt on track and who had reached the maximum coverage provided by the racing

association. Until April of 2001 the provision to pay medical expenses for member

jockeys who surpassed the cap on the track accident program was incorporated in

every health insurance contract purchased by the Jockeys’ Guild. At that time the

Guild members were covered for $100,000 by the on track accident coverage and

$1,000,000 through our health plan with ULLICO.

The year 2000, however, was a very bad year injury and health wise for the membership. There were a great many health claims paid by ULLICO and several on

track injuries that went over the $100,000 mark. One claim in particular was for

a young lady named Stacy Burton who fell at Prescott Downs in Arizona. Miss Burton was in a coma for quite some time and was lucky to be alive. Her medical expenses were tremendous and I believe ULLICO paid about $600,000 on her behalf.

These high claims costs led to a 43% increase in premium for the ULLICO policy

renewal in 2001. We were prepared for about a 20% increase and, in fact, had received comparable increases the two previous years but 43% was devastating and

we could not afford it. Through a series of executive committee meetings, it was decided to renew the ULLICO plan only in the states where the Guild received state

funding, namely California and Delaware. In all the other states arrangements were

made for the membership to switch to COBRA. In this way, each member not eligible for health coverage in California or Delaware could make payment directly to

ULLICO thereby keeping their Guild health plan in place for another 18 months.

In an effort to help the membership better afford these expenses, mount fee assessments were reduced from $8.00 to $3.00.

Realizing it would be easy for a member to forget to make payments on a timely

basis and lose their coverage, I proposed that we find a company to insure the jockeys for $1,000,000 over and above the racetrack limit of $100,000 for accidents that

would happen at the track. I suggested that we use monies earmarked specifically

to subsidize the now unaffordable health plan to pay for it. Mather and Company,

American Specialty Underwriters, Inc, and Segal and Company were requested to

find such a policy. Mather and Company was the only broker who could place such

a catastrophic plan and the cost was $443,000.00. Given the risks that jockeys take,

this was a very reasonable cost for a policy.

The catastrophic policy was paid in full, for one year in advance, became effective

April 1, 2001 and was to be in force through March 31, 2002. Now at least Guild

members injured on track were guaranteed medical coverage of $1,000,000. And

contrary to the claims by the current Guild leadership, that policy covered all of our

members who required coverage any time they were not riding in a state that had

workers compensation for jockeys (there were a handful of $2 members who expressly chose not to have Guild coverage). Members in California and Delaware and

those who elected COBRA also had family coverage. With this plan in place, I felt

I had enough time to lobby for funding to again provide a lowcost subsidized health

plan for our members and their families.

However, while we were dealing with these issues a small group of individuals

was maneuvering to take over the Jockeys’ Guild. Chris McCarron who had resigned

from the Guild some years previously, and Robert Colton who was not a member

for many years rejoined the Guild sometime around August of 2000. They campaigned vigorously for positions on the national board, lobbied aggressively for seats

on the executive committee and came to the December 2000 board meeting equipped

with a plan. This plan, I have every reason to believe, was designed by McCarron’s

54

close friend Wayne Gertmenian. For weeks before the board meeting McCarron and

Colton deluged my office with pages of questions regarding Guild transactions and

requests for supporting documentation. Every question was answered and every

supporting document was forwarded in a timely fashion.

At the December board meeting McCarron and Colton initiated rumors of mismanagement and fraud. They continued to make these allegations after the board

meeting and traveled from track to track, sometimes with Gertmenian, spreading

these rumors all across the country.

In January Colton and Michael McCarthy came to the Lexington office and spent

three days copying reams of documents. They were shown everything they requested

and were given unfettered access to the file room and copy machine. They left with

boxes of paper and then spread the report that I would not cooperate and give them

what they needed.

After their visit things progressively worsened. With a hope of clearing the air,

Guild President, Pat Day called for an executive committee meeting in the Lexington office for April 2nd and 3rd. The meeting was attended by Chris McCarron,

Robert Colton, Tomey Swan, Michael McCarthy, Jerry Bailey, Larry Melancon,

Dean Kutz, Anthony Black (by telephone), Tom Kennedy, Pat Day and myself. I answered and provided support and documentation for all of the questions asked. Just

two months before I was fired in the middle of the night, I was given a unanimous

vote of confidence by the executive committee to continue in my capacity as national

manager.

Now, I will be the first to admit that we had plenty of work to do, and that improvements needed to be made. But I would also like to point out that under my

leadership, our management team had accomplished much. I was one of the main

architects of the New York Jockeys Injury Compensation Fund, a workers’ comp

program for jockeys and exercise riders that should be the model for the rest of the

nation’s racing jurisdictions. Mr. Chairman, I understand you are having follow-on

hearings on that topic, and I would be more than happy to provide further testimony about the advantages of a New York-styled fund at that time. I would also

be happy today to briefly comment on the workers’ comp plan that your home state

is considering at this very moment.

Mr. Chairman, I was also part of the team that pushed the Maryland legislature

to adopt a workers’ comp program for jockeys in that state. Further, it was under

my leadership that the Guild persuaded California to give the Guild a half million

dollars, increased annually, and Delaware to give the Guild $350,000 annually, to

subsidize the health insurance costs of jockeys from those respective states. Today,

those funding streams appear to be in jeopardy because of the current Guild’s lack

of transparency. It would be a devastating loss if the Guild were to lose these resources from California and Delaware

We also persuaded the Massachusetts and West Virginia legislatures to do the

same. We also had made plans to convince other racing jurisdictions to help our

jockeys in the same way. I never got the chance. The real shame is that the new

Guild management has never taken advantage of the moneys we convinced West

Virginia to set aside for us. And finally, I would like to point out that my management team created the Disabled Jockeys’ Fund—that fund started with little more

than a personal $100 contribution, but when I was fired, we had over $1.3 million

in that fund. We aggressively pushed for donations and raised funds for that account, and each year we always had more money coming in than going out. There

was nothing more important to me than taking care of our disabled membership.

And we did. We never let them down. My understanding is that the new management has never sought donations and revenue for that fund.

Moving back to my earlier comment about providing to the Executive Committee

documentation supporting everything the Guild management did and answering all

the questions the Committee had—let me emphasize that this was always the case

during my time as national manager. Every single decision affecting the members

or the direction of their Guild was authorized by the Executive Committee. We always advised the Committee of the status of our financials and insurance and other

major issues, and the Committee made the final call on how to proceed. I worked

for them, not the other way around.

I must make one final comment in defense of my tenure as National Manager.

I have heard that the current Guild’s management has made statements to the effect that I was opposed to growing our membership and that I was opposed to including Latinos in our organization. That is a ridiculous and untrue characterization

of either me personally or my policies as National manager. Our organization was

open to all professional jockeys who met the membership standards and everyone

of any color or background was welcome. We worked hard to keep our membership

numbers strong. Today, the Guild’s management and board members may testify

55

that the Guild has tremendously grown, but that is somewhat a hollow claim. Today’s Guild has largely increased its membership by reducing the eligibility requirements from riding 100 mounts in a year, to riding a single mount in the past 12

months. Thus, many of those in the Guild’s expanded membership today are exercise riders—not professional jockeys.

After the April meeting’s conclusion, and the unanimous vote of confidence, I left

the meeting believing that everything had been resolved and that we could all move

forward. I could not have been more wrong. Colton and McCarthy were in Pennsylvania two days later denying they had given me a unanimous vote of confidence and

continued their allegations of mismanagement and fraud.

All these events culminated in a hastily convened conference call that was requested by McCarron on June 15th, 2001. The conference was to include only the

executive committee members and I was not allowed to participate. I have only second hand knowledge of what transpired, but I do know that there are widely differing opinions regarding the meeting and exactly what did transpire. In any event

the following morning, June 16th, I received a fax signed only by McCarron informing me that my entire staff and I were terminated. We were locked out of the Guild

offices and a new group literally moved in.

Pat Day, as president, called for an executive committee meeting to sort out the

differences. The meeting was boycotted by McCarron, Swan, Colton and McCarthy

leaving the committee one member short of a quorum and rendering it unable to

conduct business.

For the last 41⁄2 years I have remained relatively silent but this continuing calamity for jockeys and their families precludes me from being silent any longer. Somewhere along the way the people who orchestrated these changes lost sight of the

original objective and turned the Jockeys’ Guild into something I barely recognize.

There is no longer a contract with the TRA and no one can be certain if there is

any on track accident coverage, by whom it is underwritten or how much coverage

it provides. The health insurance plan is at least double the cost yet disallows coverage for on track injuries. Many tracks no longer recognize the media rights agreement and pay nothing to support member insurance benefits. Some horsemen’s

bookkeepers do not collect mount fees. The guild is facing antitrust litigation filed

by one of the country’s premier racing associations and has several lawsuits filed

against it by its own members. The Disabled Jockeys’ Fund is defunct and there is

at least one disabled member facing enormous medical bills who has been left to

fend for himself. The Guild financial information is cloaked in mystery and, while

it has been subpoenaed before this subcommittee, has not been forthcoming.

More than sixty years of progress made in funding everincreasing insurance benefits for the Guild’s members appears to have vanished. On behalf of those who

fought so long and hard for these basic needs, I ask why this occurred, who is responsible and, more importantly, how it may be restored. Thank you.

Mr. WHITFIELD. Thank you, Mr. Giovanni.

At this time I recognize Mr. Pat Day for his opening statement.

TESTIMONY OF PAT DAY

Mr. DAY. Thank you, Mr. Chairman.

I would like to first state how proud I am of Gary and Amy and

for their courage to come and testify here today. It was heartrending to say the very least.

Distinguished Members of Congress, thank you very much for

the opportunity to address you today. My name is Patrick Alan

Day. I’m a recently retired professional thoroughbred jockey. On

August 4, 2005, I announced my retirement after a highly successful career that lasted 32 years, all of which I was a member of the

Jockeys’ Guild. Let me restate that: Up until 2001.

I’m a member of the National Racing Hall of Fame, have received

numerous prestigious awards, won over 8,000 races, and my

mounts have earned nearly $300 million in purses. I’ve always

been an advocate for the jockey colony and had been a member in

good standing with the Jockeys’ Guild until June 2001 when I resigned from that organization because of what I felt was wrongful

treatment of the national director John Giovanni and my distrust

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of the new management company and the parties directly responsible for the aforementioned action.

At the time I was the president, a position I had been holding

for approximately 18 months. I had previously been the vice president, and I had been active on the Board of Directors for a number

of years.

I am here today, sir, to answer any questions you might have relating to the Jockeys’ Guild and business relevant to this hearing.

I appreciate your concern for the plight of the jockey colony and all

the time and understanding expended, and I’d like to add that

throughout the entire time that I was working with John Giovanni

as the national managing director and the executive committee at

that time, I had no reason then, nor do I now, to feel that he was

ever anything but trustworthy and fully committed to the organization.

Thank you very much, sir.

Mr. WHITFIELD. Thank you, Mr. Day.

At this time we’ll recognize Mr. Eddie King.

TESTIMONY OF EDWIN L. KING

Mr. KING. Thank you, Mr. Chairman. Mr. Chairman, distinguished members of the subcommittee, thank you for the opportunity to speak today. My name is Edwin L. King, and I have been

a member of the Jockeys’ Guild 26, 27 years that I have been

riding thoroughbreds. As a Guild member I served as a Guild rep,

and many checks I have written. In 1999, I was elected to be a director, in 2002 I became treasurer of the Guild.

The Guild was started in 1940 by Eddie Arcaro to protect jockeys

by placing their safety and welfare first. He developed a code of

standards members were to abide by. I feel that most important is

to assist in a very honorable way of furthering and protecting the

interests of our members. These are tasks the Guild’s current management has failed to do by allowing our catastrophic insurance to

be canceled.

Being jockeys comes with dangers. We’ve all experienced fractures.

Mr. WHITFIELD. Excuse me, would you mind moving the microphone a little closer?

Mr. KING. I can’t explain the shock and dismay I had when Gary

Birzer went down, learning Guild members had been riding without catastrophic insurance for over 2 years.

We risk our lives on track. The Guild cannot play Russian roulette with our health. This is reprehensible. Catastrophic insurance

is not a luxury, it’s a necessity. I’m here to tell you what I know

about the troubling experience I’ve had with the current Guild

leadership.

Shortly after becoming treasurer, Dr. Gertmenian called my home requesting my permission to move $1 million from the Disabled Riders Fund to another account unspecified at the TIME. He

assured me all moneys would still be accessible to take care of the

special needs of our disabled riders. He explained we needed to create the impression the fund would be bankrupt very soon, and that

doing this would encourage donations. I asked him if he was sure

this action was proper. He stated that I should trust him because

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he was more intelligent and much more highly educated than I was

and would not do anything to jeopardize that trust. So I agreed.

In March 2003, an event took place that gave me even more

alarm to my removal of money from the fund. Robert Colton,

former Jockeys’ Guild member, expressed concerns about the

Guild’s accounting and recordkeeping. I repeatedly contacted the

Guild office, Tomey Swan and fellow Board members to get documentation on where, when or if the money had actually been transferred. I never got an answer. I became more and more frustrated

as important financial documents I’d ask for were never given to

me.

On May 15, 2003, I resigned from the treasurer, but when I received assurances from friends and members that I would have no

more problems, I withdrew my resignation. At the national assembly in 2003, I was replaced as treasurer even though my term was

to last 3 years. I still wanted to know about the Disabled Riders

Fund’s money and spent most of 2004 trying to figure out where

it went.

During a teleconference on August 8, 2004, Tomey Swan stated

I was trying to start trouble. After explaining the initial conversation Dr. Gertmenian and I had December 2002 regarding the $1

million, Dr. Gertmenian first said that we never had spoken. Then

he said I misunderstood, it was only $250,000 to be deposited into

the disabled jockeys endowment. When Dr. Gertmenian originally

asked for the $1 million, the endowment was not in place.

In October 2004, after I spoke to the press about the Guild’s

problems, my wife and I began receiving harassing phone calls

from various members of the Guild. Darrell Haire and Tomey Swan

told me I should resign so the issues would go away. However, I

was determined to make sure that my fellow riders’ member payments and mount fees were being used responsibly and the disabled would be cared for, so I refused.

November 7, 2004, via teleconference, the senate of the Guild removed me from my seat without formal charges. In December I

was expelled from the Guild during a meeting I was not allowed

to attend, I believe at the direction of Dr. Gertmenian.

Today my family and I continue to fight to get the off-track

health benefits I am eligible for as a jockey riding in Delaware. The

Guild continues to deny me that right. After 3 years we still have

no answers about what happened to the money from the Disabled

Riders Fund. The current Guild leadership still refuses to be financially transparent and accountable to its members. My family and

I are struggling to get health coverage we have earned. In addition,

perhaps most important, the national program for catastrophic insurance is gone.

Dr. Gertmenian has a great account, but Gary Birzer is without

the help he desperately needs. For the sake of my fellow riders, I

hope this hearing will help right these wrongs.

Mr. Chairman, thank you for the opportunity to address the subcommittee. Please accept my full written testimony to the Congressional Record. I would be happy to respond to any further questions.

[The prepared statement of Edwin L. King follows:]

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PREPARED STATEMENT OF EDWIN L. KING, THOROUGHBRED HORSE JOCKEY, FORMER

TREASURER, JOCKEYS, GUILD

Mr. Chairman and distinguished Members of the Subcommittee, thank you for the

opportunity to discuss the health and welfare of our jockeys.

My name is Edwin King and I have been a member of the Jockeys’ Guild for 26

of the 27 years I have been a thoroughbred jockey. If it had not been for the many

barriers and lies by Dr. Gertmenian, Albert Fiss, and the present Guild management, I would still be a member. During my years as a member I served as a Guild

representative at many different racetracks. I have ridden in Colorado, Arizona, Illinois, New York, and Florida. I have spent the last 17 years based in New Jersey.

In 1999, I was elected to be a Director of the Guild. In 2002, I became Treasurer.

I was very proud my fellow members had put their faith in me, to be one of their

leaders. Now because of the above mentioned and their campaign of lies against me

around the riding colonies in the U.S., the same riders look upon me as if I have

done something wrong.

I am probably one of the few riders who also have family ties to the original Guild

organization. Two of my grandfathers, three of my uncles and my father were all

Guild members. The Guild was started in 1940 by Eddie Arcaro to protect its members and put their safety and welfare first, which the current Guild leadership has

failed to do by allowing our catastrophic insurance to be canceled without a plan

in place.

Health and Welfare of Jockeys

It was very sad to hear of Gary Birzer’s accident and even more so to hear that

our catastrophic insurance had been canceled. Only after the accident was it

brought to my attention we no longer had this benefit. Immediately I contacted Albert Fiss to find out the truth. After dancing around the question he admitted the

policy was no longer in affect and had not been for sometime. As a Guild board

member, this is something that I should have known. From the time it was put in

place by John Giovanni, I had informed my wife, if ever I was severely injured, she

should know there is an on-track insurance policy through the Jockeys’ Guild. To

my knowledge, this policy was still in place and it had never been discussed on any

calls or meetings that I had attended.

Once the news of the loss of our catastrophic policy was revealed, Dr. Gertmenian

started with the lies. He began by spreading rumors that Mr. Giovanni had canceled

the policy, and then it was Jerry Bailey and Pat Day. I recently heard that it was

cancelled by the board that was serving at that time. Now we all know Dr.

Gertmenian took it upon himself or by the advice of Matrix to cancel the one most

important things to a jockey. He just fails to take responsibility for his mistakes and

failures.

We as jockeys risk our lives every minute we are in our workplace environment.

Catastrophic insurance is not a luxury; it is an absolute necessity. This management should be ashamed of itself for allowing this to happen and it should be held

accountable for the riders and their families that have been injured during the time

period after this policy was dropped. Dropping this policy without having another

one in place was just playing Russian roulette with the members’ lives. This is a

game they lost and continue to deny responsibility for by finding others to blame.

This is just one of the many barriers that I have faced trying to work with the

current Guild leadership. I do believe that the cost should be shared in our industry

for catastrophic insurance. Thoroughbred horseracing is considered to be one of the

most dangerous occupations you can be in. It is time that a thoroughbred jockey is

considered a viable part of this industry.

Disabled Jockeys’ Fund

In December 2002, I became the Treasurer of the Jockeys’ Guild. This is a position I did not want. Dave Sheppard, now our Chairman, nominated me to the position. There were no other nominations so I did what I always do and accepted the

responsibility. I took my new position very seriously. After reviewing what was expected of the Treasurer and all the duties that came with it, I was not sure I really

wanted it. Approximately two to three weeks after the Guild Assembly that was

held in Dallas, Texas, I received a call from Dr. Gertmenian requesting approval

to remove $1 million from the Disabled Jockeys’ Fund in order to give the impression that the Fund was going bankrupt and entice people in and around the horseracing industry to make donations. During our conversation, I asked if he was sure

it was okay to do what he was asking. Dr. Gertmenian said that he was highly educated and much more intelligent than I was and that should merit my trust. At that

time, I gave my approval.

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In the latter part of March 2003, I received phone calls from fellow board members and Robert Colton who was working for the Guild in California. He was having

some concerns regarding the new Guild management team and stated that the accounting and record keeping was less than desirable. An emergency Board meeting

was called for all Board members to meet in California. At the meeting Mr. Colton

appeared to have done his homework. Those of us who know Robert know he is very

articulate. During his presentation the management team, specifically Lisa Haley,

Albert Fiss, and Steven Rice constantly cut Robert short saying he did not understand the dynamics of creative bookkeeping. He was not seeing the picture they told

him repeatedly. He tried to show us the number of riders who were in error on the

health insurance plan. That number was between 50 and 100. Robert talked to us

about the commingling of riders’ dues and per mount fees in the operating account,

which Steven Rice admitted to me later the next month was actually true. After the

continued abuse by Dr. Gertmenian’s team Robert, lacking any other choices,

packed up and left the premises. After listening to the information Robert had presented I became very concerned I had made a tremendous mistake approving the

removal of any funds from the Disabled Jockeys’ Fund. Because I hadn’t received

any documentation on where the $1 million had been transferred to, exactly when

it had been transferred, or if it had been transferred I knew my mission was to

make sure the money was in a separate account, earmarked just for the permanently disabled with every penny accounted for. I have since then learned that a

portion of the $1 million was transferred around the middle of December 2002,

which was prior to Dr. Gertmenian’s call to me. Where those funds were distributed,

I am still not clear on.

On numerous occasions, I contacted the Guild office looking for these answers

without resolution. I not only was in search of the disabled Riders Fund but also

records on the numerous bank accounts—i.e., the operating, payroll, and media

rights accounts,—investments, credit card statements, along with receipts and corresponding logs. I asked for rental receipts for the office. The list seems that it could

go on forever on what was asked for and what was never received. I had e-mailed

Tomey Jean Swan and my fellow Board members with the hope they would help

me resolve this problem. This went on for approximately 18 months. Ms. Swan’s responses to my e-mail were always very vague, but at one point, Ms. Swan did advise

me that the $1 million was being used by the Guild to self-insure. That was the

first I had heard that. I got so many different answers it was amazing where this

$1 million was moved. However, never did I get what I was asking for: the documentation to prove where it was.

Finally, a phone conference was scheduled for August 8, 2004, which happened

to be our biggest day in racing at Monmouth Park. My wife and I had a dinner engagement with an owner and trainer of a horse that I had ridden that day, resulting

in me being late for the call. A few moments after connecting I heard Ms. Swan

state that I was trying to start trouble in the organization. At that time, I explained

that I would state my reasons for asking for the conference. I explained the conversation between Dr. Gertmenian and me about the $1 million.

Dr. Gertmenian immediately stated that our conversation had never happened,

that I misunderstood him, and then that he only asked for $250,000. I became very

angry and Dr. Gertmenian and I had an extremely volatile exchange in the presence

of the entire Guild senate. After a cooling out period, Ms. Swan explained that Dr.

Gertmenian would often say something that was false and she would have to correct

him by saying, this is probably what you meant to say.

It was decided that Albert Fiss, Ray Sibille, and myself would get together via

a three-way phone call and go through the account transactions and reach a conclusion on the Disabled Jockeys’ Fund. Due to some unforeseen circumstances, we were

not able to accomplish this. In the meanwhile, I copied everything and forwarded

it on to Tom Megale, a CPA based in New York. Tom advised me that he could not

make any conclusions or recommendations based on the information he was going

through and that he did not think it was what I was looking for. With the information I was provided I noticed some temporarily and permanently disabled riders

from California and Delaware were paid from The Disabled Jockeys’ Fund. Normally you might think this was not improper but there are state programs to take

care of riders eligible in those states. I had asked Albert Fiss how the Disabled

Jockeys’ Fund was disbursed to pay temporarily disabled riders, including the Delaware and California jockey colonies, and how the funds were reimbursed. Mr. Fiss

advised me that when those programs paid in, they would reimburse the Disabled

Jockeys’ Fund. The real problem here is that the fund is a charity and was set up

for the special needs (electric bills, house payments, auto repair bills, doctors’ bills,

etc.) for the disabled riders, not to make the temporary disability payments for the

guild.

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Expulsion from the Guild

In October 2004, a friend informed me that he had been talking to the Labor Department and I would be receiving a call from a woman investigator. Two days

later, reporter Liz Mullen called. It did not register exactly who she said she was,

so when she asked a question I answered it to the best of my knowledge. Ms.

Mullen’s questions were all in reference to the catastrophic policy and the Disabled

Jockeys’ Fund. Ms. Mullen asked if I was aware the catastrophic insurance had

been dropped and when or if I had been notified. I explained to her that I was unaware until I heard about Gary Birzer. Liz asked me about the Fund and I gave

her the full explanation. How I had spent months trying to find answers and the

roadblocks I had encountered. She actually knew that most of the money was gone

before I did. Liz went to the Internet to find out information and helped me to find

out more disturbing facts. She showed me how to find the Guild’s filings with the

IRS and the Labor Department LM2 and LM30 forms. They were either not filed

or were extremely late.

Approximately one week after Ms. Mullen’s article was published and another by

Bill Christine from the LA Times I received an angry phone call from Dave Shepherd, our Vice Chairman. He said that I should not have aired anything to do with

the Guild in any open forum. During our conversation, I informed him that as members of the Board of Directors we were not doing our fiduciary duties with the way

things were being handled. In response, he informed me that I should resign because I had done tremendous damage to the Guild, and threatened that if I did not

resign, ‘‘there would be consequences.’’ He would not elaborate on what that might

be.

Mr. Shepherd called about a week later reiterating our first conversation and

shortly afterwards, I began to receive calls from jockeys that I hardly knew asking

me to resign or they would throw me out of the Guild. The callers included Mr.

Shepherd and jockeys G.R. Carter, Brian Peck and Glenn Murphy, who I learned

were instructed to call by John Beech. The calls even came in at night, when the

callers knew I was away and riding at the Meadowlands. Instead of talking to me,

they harassed my wife, hoping she could get me to resign.

On November 3, 2004, I attended a three-way call with Tomey Swan and Darrell

Haire. They told me how I damaged the Guild and were hurting the membership.

Again, both Tomey and Darrell told me that it would be in the best interests of the

Guild for me to QUIETLY resign so that everything that was happening would

QUIETLY go away.

On Sunday, November 7, 2004, a phone conference was scheduled in which I was

on the agenda for expulsion. The Guild failed to charge me or notify me of any

charges before the conference. During the conference they accused me of having my

own agenda, and that I was involved with Robert Colton and his issues with the

Guild. They read seven reasons for removing me from my senate and Executive

Board seat. Dave Shepherd had the gall to blame me for the walkout at Churchill

Downs on the same day.

Without allowing me to defend myself, they voted me off the Board. Ms. Swan

informed me I was no longer to call the Guild office and harass them for the information that I had been seeking for the past 22 months. A recording of this call has

been circulated and played on ‘‘At The Races and Beyond,’’ a radio program heard

on Sirius Satellite Radio.

On December 5, 2004, at the Guild’s national assembly, which I attended only

briefly before being totally expelled from the organization, I sat in the seat designated for New Jersey’s Monmouth Park and Meadowlands racetrack delegate.

After a very short time, the Executive Board and Senate went to what they call a

breakaway session. After approximately 45 minutes, all the members returned to

the main room, at which time Kent Desormeaux informed me that the Board had

met with its attorneys and the vote for my expulsion was unanimous. When I asked

Kent for the reasons, he said that Dr. Gertmenian had told the Board that they had

spent over $ 5,000 to send Albert Fiss to explain the Fund to me. Another lie!

Mr. Fiss did come over to the Meadowlands racetrack to see me. Upon his visit

he failed to bring any material or information concerning the Fund. Mr. Fiss was

actually scheduled to be in New York for a committee meeting on workmen’s compensation. Coming to see me was a side trip.

May 2003 Dr. Gertmenian’s Matrix Contract

After returning home from the March 2003 Board meeting in California, Ms.

Swan contacted me and asked if I knew a contract attorney that could help us with

Dr. Gertmenian’s Matrix contract. I indicated that I knew attorneys on the East

Coast but felt that it was a conflict of interest to consider someone that was involved in the horseracing industry. Therefore, I contacted a firm out of Denver who

61

highly recommended Steven Blitz. We worked with Steve for approximately three

weeks, putting together a draft contract for Dr. Gertmenian. The board was to have

a conference call on a Wednesday to go over the draft. Ms. Swan set up a conference

call prior to the scheduled Board call with Dr. Gertmenian and the Board and advised me this would just be a question and answer call. I advised it was just a draft

and it was not ready to be presented to Dr. Gertmenian at this time and she responded that she understood. At approximately 11:20 p.m. Eastern time I was ordered by Tomey Swan to fax the draft. Once Dr. Gertmenian and Mr. Fiss read over

it they decided they could handle our terms. Around 12:30 AM Eastern time, Dave

Shepherd made the motion to vote to accept the contract. It was seconded and a

vote was taken passing the new contract.

After Dr. Gertmenian had made phone calls that day to Board members threatening to walk away, it came down to a 5—4 vote to give him what he wanted. On

May 15, 2003, stressed by the Board’s inability to make what I felt was the right

decision and make Dr. Gertmenian and Matrix more accountable, I submitted my

resignation (see Attachment). In the letter I pointed out the lack of legal documentation, bank statements, credit card receipts, the negligence in keeping track of the

riders’ insurance premiums (many riders were and most likely still are in error).

Other Board members reassured me that we would hold Dr. Gertmenian accountable and persuaded me to stay on. In December 2003, Dr. Gertmenian again wanted

to renegotiate his contract, only this time he failed to have a notice sent out so all

Board members could attend. After all he only needed 5 votes.

Delaware Health Insurance

As a guild member, I always carried the Guild’s health insurance program and

in 2002, I rode primarily at Delaware Park becoming eligible for Delaware’s subsidized premiums. It now only cost me approximately $280.00 a month. In 2003, I

did not meet the eligibility to retain the subsidized cost and decided since my wife

covered the family through her employment with United Airlines we would cancel

it with the Guild. During the 2004 racing season at Delaware Park I rode enough

horses to again become eligible for the program. On or around November 3 I rode

my 50th horse, completing eligibility requirements. During the last week of Delaware racing, I contacted the Guild office and informed Eric South that I would like

to start receiving the insurance again from the Delaware fund. At that time, he

faxed all the required forms to my home, which I immediately completed and returned to the Guild’s office. Mr. South advised me that if all the documentation was

in place, this policy would take effect December 1, 2004.

I again spoke with Eric South in early December at the Guild’s Annual Assembly

in Texas to see what the status with my insurance was and he stated everything

was in place. Around December 20, 2004, I contacted Larry Saumell, the Guild representative, and asked if he would check into this for me because I had not received

any information that this policy was in effect. On or about December 29, my wife

and I spoke with Larry Saumell on separate calls. He advised us it was under review and I needed to speak with Albert Fiss. I called the Guild office that same day

and spoke with Eric South who also informed me it was under review and I needed

to speak with Albert Fiss. I left a message on Albert’s cell phone that I needed to

speak with him regarding my insurance. I did not receive a return phone call. On

January 3, 2005, I spoke with Earlie Fires about this matter and he advised me

that because of my pending lawsuit with the Jockeys’ Guild, Mr. Fiss refused to talk

to me. My wife Penny has spent time attending Delaware Racing Commission Meetings and also the Delaware Health and Welfare Meetings. The Guild was advised

on many occasions to get our health insurance in place. One request from the Guild

by its CFO Gevork Asatryan was that that all five of our family members needed

physicals and that a payment for two months in advance needed to be made to get

our family active. On August 9, 2005, all required information was sent overnight

to the Guild office. After my wife called to see when we would receive our insurance

cards, she was advised by Lisa Haley that Delaware had not paid them in two years

and they were not adding any new members to the policy. Lisa also advised that

Albert Fiss would call us, but he never has. Gevork Asatryan later contradicted

what Ms. Haley had said about Delaware not paying, saying that she must have

been mistaken. We have not yet received our check back, or a letter explaining why

we are being denied our health insurance benefits. Mr. Asatryan did advise verbally

that we would not be getting our insurance through the Guild. The administrator

of the Delaware Racing Commission, John F. Wayne, has been very helpful in trying

to help my family get back on the health insurance plan.

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Closing Statement

It was not easy this year, but I know what I have done is the right thing. The

problems I have experienced with this Guild management and rapport they now

have with the thoroughbred industry has only strengthened my belief that this man

and his team that are so much smarter than I am are incapable of running this

organization like it should be run. Dr. Gertmenian took it upon himself to accept

disability insurance from the jockeys while he pulled the jockeys’ security blanket

right from beneath them. If that is not bad enough, he did not properly inform us

that it was gone. In addition, they have been unwilling to share with me the financial records that I have every right too see and that the law required me to obtain,

and they have also criticized me and tarnished my reputation for doing so. And to

top it off they have essentially made it impossible for me to enjoy the health insurance benefits I deserve as a Delaware jockey.

Mr. Chairman, thank you for providing me with the opportunity to address the

Subcommittee. Please accept my full written testimony to the Congressional record.

ATTACHMENT

May 15, 2003

Mr. ROBBIE DAVIS

70 St. Paul’s Place

Hempstead, NY 11550

DEAR ROBBIE, With much regret this letter is to inform you that I am resigning

my position, as treasurer on the Executive Board from the Jockeys’ Guild. I do not

feel that I can represent the members of this organization in a professional manner.

There are several reasons that I am turning in this resignation. The responsibility

of the treasurer is to account for all financial records including past records, current

funds, accounts receivable and accounts payable. After requests were made to the

Jockeys’ Guild/ Matrix Office I was unable to acquire bank statements and other

records applicable to be able to fulfill my responsibilities as treasurer. This is very

frustrating when you are appointed a position and cannot attain the information

needed to fulfill my duties. I will not be liable for incorrect accounting procedures.

(A) The lack of legal documents. (stated it will take 60 to 90 days to acquire them)

(B) The lack of logs for travel and expenses. (Stated to me these are very honorable

people) this still should have been done.

(C) The negligence in not keeping track of the rider’s insurance premiums. (many

riders are now in arrears which could cost the membership thousands of dollars)

These are just a few of many problems I feel the Guild is facing for not keeping

and tracking the accounts. As pertaining to the Delaware and California Trust

Agreements it is required under the agreement the Guild shall;

(A) Maintain at all times as a tax-exempt entity. The Trust shall appoint a Certified

Public Accountant for the purpose of providing an annual audit to TOC and the

California Horse Racing Board of all moneys received and expended by the

trust. The TOC and the California Horse Racing Board shall have the right

upon reasonable notice to the trust to review the books and records of the Trust

at any time. (Stated it does not matter it is mandated, it cannot be taken away.)

(B) Delaware—I did not receive a Vine Street Trust Agreement pertaining to this

fund.

This is just a few reasons I have for resigning. After being told, many times we

have nothing to worry about. I feel we have many reasons to worry. Ignorance is

not a defense! A request by our chairman Tomey Swan was made for me to seek

outside Legal Council concerning the new agreement proposed to us in March by

Dr. Gertmenian/Matrix. There were many Attorneys on the East Coast that I knew

but thought it was a conflict of interest to be connected with horse racing therefore

I contacted a firm out of Denver Colorado who came highly recommended. Steven

Blitz a specialized contract attorney that presently sits on two Executive Boards. He

made a draft and a memo stating that there were many ambiguities and wished

to discuss this with the Board. Mr. Blitz was going out of town so we scheduled a

conference call for Tuesday May 13 at 7pm. It was discussed with Tomey and Dave

to defer the conference call with Dr. Gertmenian until we had reviewed the ambiguities on the conference call that was scheduled with Mr. Blitz. I was advised that

we should continue with the call on Monday night and it would just be a questions

and answers session, so I had no problem being on this call. After reviewing my fax

records at 11:19pm Eastern Time the draft was faxed to Dr. Gertmenian, with in

minutes the draft was passed. The $3000 dollars that was spent on council was a

waste of the membership’s money since the Board failed to follow through.

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This organization has struggled over the past few years. One would have thought

some of the lessons learned would have been a guiding factor in the decision the

Board recently made.

SINCERELY,

Edwin L. King

cc: Tomey Swan; Ray Sibille; Deirdre Panas; Jockeys’ Guild Inc.; Kent Desormeaux;

Larry Reynolds; Dave Shepherd; and Abad Cabassa

Mr. WHITFIELD. Mr. King, thank you.

At this time I recognize Mr. Donahue for his opening statement.

TESTIMONY OF GARY DONAHUE

Mr. DONAHUE. Thank you, Mr. Chairman, for an opportunity to

be here. I’d like to start off that I became a jockey in 1980. I was

a Guild representative in 1982. I also competed in races against my

father. My father was a jockey for 25 years.

I rode for 7 years until I was injured March 1, 1986. When I first

got injured, at the time the hospital on-track insurance was

$50,000 in 1986. Any time after the $50,000 was absorbed when I

got injured, John Giovanni and the Jockeys’ Guild took care of all

the medical bills, everything that was left over from my injury.

Whenever I needed to speak to John, he was always there for me.

When I was a kid growing up, John—I remember my father had

concerns about the financials or anything of the matter with the

Guild, John was always there. Nick Jemas always answered all the

questions whenever my father wanted to know. When—after I got

injured, there was a Roger Van Hoosier who oversaw the Disabled

Riders Fund, as far as he was like a disabled liaison. He did a very

good job when John was national manager, and in 2001 when the

new management took over, that’s when I was asked to oversee the

Disabled Riders Fund, to become cochairperson.

One of my—some of my duties were to respond to letters, e-mails

and phone calls from permanently disabled riders, not temporary

riders at all. The questions could vary from needing wheelchair,

medical supplies, to having the bills taken care of, car repair, home

repair, et cetera. If someone needed durable medical equipment, I

would inquire around the country to get the best prices possible to

help save the disabled riders some money, of course, but also to get

the proper equipment they needed. I would then contact the Jockeys’ Guild as cochairperson, Jamie Hall. She would relate it to Albert Fiss and Wayne Gertmenian. If they were to approve the

funds, they would then allocate it from the Disabled Riders Fund.

This is the same fund John Giovanni started in 1990 with $100 of

his own money. In 2001, the amount in that fund grew to $l.3 million. That money almost doubled every year from 1997 to 2001,

which was very good.

That all came to a halt when John Giovanni was taken out of

the Guild. I became concerned after I learned that the money in

that account would be gone at the end of 2004. I found out about

this on line by reviewing public records, the 2003 financial report.

This statement on the form that Wayne Gertmenian signed that

the fund would no longer exist at the end of 2004 was very disturbing when I read this. I was never told this; I had to read it

on line.

After this, month after month of asking the Guild to send me

records of how much was in that account. As cochairperson I needVerDate 11-MAY-2000 09:27 Nov 28, 2005 Jkt 000000 PO 00000 Frm 00071 Fmt 6633 Sfmt 6602 24255.TXT HCOM1 PsN: HCOM1
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ed to know the state of the account, how much was being spent and

how much was coming in. I also learned that the fund was being

used for temporary disabled riders. Now, I know in the past when

John was national manager he never used that money for temporary disabled riders whatsoever. That fund was set up, was born

to help permanently disabled riders, and that’s it, for special needs.

For instance, in my situation I became paralyzed from a horseracing accident. I was permanently disabled, although I was considered temporary for the 104 weeks by the Jockeys’ Guild’s standards. Although John knew that I had a permanent injury, that I

would never walk again or ride again, I would receive benefits from

that Disabled Riders Fund that was established. In the situation

like mine, John knew that was the case, so I was deemed temporary; then I became permanent. John used the money from the

Disabled Riders Fund to help me with my durable medical equipment, such as wheelchairs and different devices to help me walk

with braces, so forth, to have a better productive life. He would

then do that with other critically injured jockeys. But for jockeys

that broke a collar bone or arm or sustained a minor injury, the

money for the temporary riders would come from another account.

I asked Wayne Gertmenian and Albert Fiss many times why

they were using money from the Disabled Riders Fund to help temporary disabled jockeys. He told me they voted to use that for temporary disabled riders. He gave me four names of jockeys on the

Board that voted for this change: Mr. McCarron, Mike McCarthy,

Robert Colton and Ken Desormeaux. I spoke to all four of them the

evening that I was told this, and I ended up talking to Mr. McCarthy the next day, and all four related to me they don’t remember

that vote ever being taken.

I was also told by Albert Fiss and Wayne Gertmenian I should

not be concerned with this matter, so from then on I started to

gather my own information by reviewing form LM-2 Labor Organization Annual Reports 2001 through 2003. On those forms I was

able to review what the Guild was reporting for expenses. In—excuse me, in the LM-2 reports I saw expenses on an incline, not a

little bit, but a lot. That’s when I started asking Gertmenian and

Fiss about different expenses. As a Guild member I have every

right to ask any questions I have about finances, whether you’re

a disabled or active jockey. Once again I was told I should not be

concerned about these matters.

I do not know what ‘‘additional supporting services’’ and ‘‘promotion of racing’’ are. I viewed these on one of the financial reports. Because so many—there was hundreds of thousands of dollars of expenses being paid by the jockey going out for these additional supporting services and promotional racing. Any time during

John Giovanni’s tenure, if a jockey would have a question about the

Guild finances, they would do whatever they could to comply with

the request.

Now in 2001 I reviewed the LM-2 reports. Supporting services

and promotional racing in the amounts of $610,000 went out. In

2002, $843,000 was spent, and in 2003, $1,182,000 was spent for

supporting services and promotional racing. Once again I asked

where this money is going, who is it being paid to. Once again,

none of my concern. I should not be concerned with this matter.

65

Well, I should be because it’s our money, and where is this money

going?

I also noticed there was a steep incline in office expenses and ad- ministrative expenses in the amount of $176,000 in 2001, $434,000

in 2002, and it went down slightly in 2003. So far from 2001 and

2003, these expenses were alarming, in the amount of $2,635,000

for additional supporting services and promotional racing, $854,000

for office and administrative expenses.

I was not receiving any help from the Guild as to why these expenses have jumped from 2001 to 2003, so I decided to become involved in the lawsuit against the Jockeys’ Guild concerning these

expenses and the downfall of the Disabled Riders Fund. After the

Guild learned I joined the lawsuit against them, I was fired as cochairman of the Disabled Riders Funds. Ironically a month prior to

being fired, I was told by Tomey Swan and Albert Fiss that I was

doing a great job and that he had saved the Disabled Riders Fund

and the Guild thousands of dollars.

In closing, I would like to say that as a jockey or a disabled jockey, I have every right to ask about the expense of the Jockeys’

Guild management. They work for the jockeys. The Jockeys’ Guild

management has a fiduciary duty to manage our money. It’s not

theirs.

Thank you very much, Mr. Chairman.

Mr. WHITFIELD. Thank you, Mr. Donahue.

Before I ask Tomey-Jean Swan for her opening statement, I just

want to be sure, because you were by video, that you are testifying

under oath. I did swear you in; is that correct?

Ms. SWAN. Yes, sir, you did.

Mr. WHITFIELD. I just want to make sure, do you have legal

counsel with you or not?

Ms. SWAN. No, I do not.

Mr. WHITFIELD. Then you’re recognized for your 5-minute opening statement.

TESTIMONY OF TOMEY-JEAN SWAN

Ms. SWAN. Mr. Chairman and members of the committee, my

name is Tomey-Jean Swan. I’ve been a jockey since 1969, when the

law was actually changed so that women could be allowed to ride.

It was 3 weeks ago that my doctor told me I would not ride again.

That is a result of on-track injuries.

There’s no need for me to reiterate what has been stated by most

of you on the panel, and that is the urgency to obtain adequate catastrophic insurance for jockeys. The one thing I sincerely believe is

that it is the responsibility of the racetracks. For racetracks to say

that jockeys need to supply their own is unconscionable. They know

that many, many riders make only minimum wage, and to expect

them to even to pay for insurance when tracks are making millions

off our image simulcast around the world is ridiculous. Understand

that owners and trainers are in the same boat. There’s a small percentage that make a lot of money, but most of them are just getting

by and can’t afford to stay in the business if they are hit with these

high costs.

As far as Dr. G and his team goes, look at our membership numbers. We are happy with our leadership. We finally have someone

66

who knows how to stand up for us. He has in place attorneys

around the country, most pro bono, who can help us when we have

problems with the racetracks. He got our health insurance for us

and our families back in place.

Our problem is with the callousness of the racetracks, not our

leadership. Dr. G and his team came up with a list of safety issues

that needed to be in place at every racetrack. These are commonsense, but very necessary things to help ensure our safety, and yet

we fight tracks at every turn trying to get them in place.

The safety rail is one issue. It has been proven time and again

not only to save jockeys serious injury, but our partner, the equine

athlete, as well. And yet many tracks across the Nation refuse to

put it into place until there is a life lost or an arm or a leg, then

a lawsuit. Then they put it in.

I can speak from experience on that. At a track at Farmington,

New Mexico, where I had begged and pleaded for a safety rail for

years, it took my horse getting speared and dying on their archaic

rail and me being on crutches and then a wheelchair for 21⁄2 years,

subsequently winning a lawsuit, before they installed the safety

rail.

Most racetracks across the country do not care about their

equine or their human athletes, or they would welcome any benefits to safety. They do not have a conscience on their own, and so

we need your help to help make them take on this responsibility.

Thank you.

[The prepared statement of Tomey-Jean Swan follows:]

PREPARED STATEMENT OF TOMEY JEAN SWAN

Hello, my name is Tomey Jean Swan. I was fortunate enough to have grown up

in a family that revolved around horse racing. My father was one of the leading

Quarter Horse trainers in the nation and taught me a love and respect for this incredible specimen of speed, the racehorse. He used me as his jockey from an early

age, but of course, only on backcountry roads or bush tracks against friends and

neighbors, as it was against the law for a woman to be a professional jockey. I would

get his horses ready to go to the real races, the pari-mutuels and then a male counterpart would take over the reins. It wasn’t until my senior year in high school in

1969 that this archaic law was changed and I began my official career in California.

I was the first woman to win at every QH meet in the state and did lots of promotional horse racing spots with the then-governor, Ronald Reagan. Since that

time, I have been the leading female QH jockey in the nation for most of those 35

years. I joined the Jockeys’ Guild around 1975 and have been an active member

ever since. I was a Guild representative at the various tracks at which I rode and

was the first female delegate for the Guild. I then was voted the Vice Chairman,

beating out Kent Desormeaux, becoming the first female on the board. In 2001, I

was voted the Chairman of the Board of the Jockeys’ Guild and became the first

female and more importantly to me, the first Quarter Horse jockey to hold this highest of honors. In 2004, I was named Co-Vice Chairman of the Board with John

Velasquez and currently hold that position.

Upon receiving your invitation, I was very disappointed, if not surprised, to see

this hearing titled, ‘‘Thoroughbred Horse Racing Jockeys . . .’’. Just as a point of fact

in 2004,

a. there were 8799 Quarter Horse races run in 25 states

b. QH purse money was almost $94 million

c. pari-mutuel handle for QH races was over $324 million

d. 950 jockeys rode Quarter Horses, there were 5530 QH breeders and 7395 owners

of QH

As you can see, Quarter Horse racing is a vital part of the overall racing industry.

Allow me to take this opportunity to explain to you the unbelievable risks involved in this sport. Time magazine did an article on athletes years ago, that listed

being a jockey as the #1 most dangerous athletic profession. Speaking personally,

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I have had 14 knee surgeries and now a total knee replacement, a punctured and

collapsed lung, broken ribs, toes, wrist, femur, knee and shoulder, hospitalized for

eye injuries from rocks busting through my goggles and uncountable concussions

and I have been one of the lucky ones, because I am not paralyzed or dead. The

old adage around the jock’s room is, ‘‘it’s not if you are going to hurt, it is how badly

are you going to be hurt’’. With today’s rising hospital costs, it is unconscionable

that the racetracks only offer $100,000 accident insurance for their jockey participants. And keep in mind that during all the injuries we suffer, we are out of work

while we are healing. Only a few states offer us any kind of workman’s comp.

You would assume, that over the years, things would get better for the jockeys;

but that is not the case. The only light we have seen, has been since Dr. G and

The Matrix team have taken over the reins of our organization. Before the ‘‘G’’ era,

we had dwindled down to a paltry 500 or 600 jockeys and practically no respect

from the racetracks at which we participated. We lost our health insurance for ourselves and our families and saw our staff members receiving good pensions and the

jockeys receiving nothing. As soon as we made the change to the ‘‘G Team’’ we immediately regained our health insurance and steadily have regained our members

and have reached an all time high. We now have at our disposal, a wonderful and

talented staff of experts. I have used them myself to help intercede at tracks that

were being discriminatory against us. Pro bono attorneys hopped on a plane and

were there the next day to set things right. We are finally realizing that even

though we are locked in a jock’s room, we still have the constitutional rights of any

other American citizen. Respecting jockey’s constitutional rights, has never been the

intention of ANY racetrack in this country. And the sooner this committee realizes

that, the sooner you will realize the plight of the American jockey. Dr. G has given

us a long term negotiating plan that will enable us to be a respected and protected

American athlete. All jockeys are working toward this goal and that is why I believe

Churchill Downs is so afraid of Dr. G and what he can accomplish for jockeys nationwide. They want to retain the foot on our throats that they have had since the

beginning of racing. Would you expect any pro athlete, such as Peyton Manning or

Brett Favre to set food on the field and be told that their insurance would have to

come from their player’s union dues or out of their own pockets? I can assure you,

there would be no Super Bowl.

Our problem does not lie with our organization, our problem lies with the racetracks, and we need your help to make them step up to the plate and protect their

athletes.

Thank you for your time and consideration.

Mr. WHITFIELD. Ms. Swan, thank you very much for that testimony.

And at this time, Mr. Shepherd, you’re recognized for your opening statement.

TESTIMONY OF DAVID SHEPHERD

Mr. SHEPHERD. Thank you, sir. It’s an honor to be here. My

name is Dave Shepherd. I’ve been a professional jockey since 1975,

30 years. Never been a star. I think I have gained the respect of

my peers. The most important thing to my life has been being a

dad, and my family comes first. My wife is a third-generation trainer. My son is 19 and rides in Kentucky. I’ve got a 14-year-old son

working horses already and will be a jockey, and a 7-year old

daughter that I don’t think we can keep her, she’s rodeoing and

will be a jockey also.

That’s what brings me to where we’re at. With the Birzers, when

all that happened, Gary is like family to me, and it hurt. There’s

a lot of tears on my part as well as his. He’s family. And we did

everything we could to help.

I’ve got to back up a little bit. I don’t think we should pay for

our on-track insurance. The history of what’s happened over the

years, the callousness and the way that Gary has been, he told you

how it happened from the racetracks, that’s a true story. That is

how it is. We’re treated—we’re expendable. To the industry we’re

68

expendable. If one of us gets killed, two more come. They don’t

really care about us as persons.

When Chris started bringing Dr. G in, I was against that for the

problems that would cause and subsequently to where nobody

would believe anything that anybody said, that we lost all respect

in the industry. When Dr. G came into it, we was close to bankruptcy. Talking about all the millions of dollars that were supposed

to be there, talking about the $2.2 million, last year they billed

$2.5 and received $2.2. We’re not receiving it.

We give up our media rights, which that’s 85 percent of the industry right now; we give up our media rights in exchange for

what? Mountaineer Park has never given the riders a nickel. It’s

one of the worst tracks in the Nation. You have had four riders

that have been permanently disabled there, five riders killed there,

and they’re still callous. They don’t care about us.

We all thought we had insurance from the racetracks any time

we were injured, any time we were hurt. It wasn’t until Stacey

Burden went down in Arizona and got hurt, and consequently from

that accident there that’s where we lost our insurance. That was

one of the major proponents of how we lost our insurance.

Mr. WHITFIELD. What year was that?

Mr. SHEPHERD. 2000. That was the big one that John Giovanni

talked about that cost so much. Now because of that they had to

make a choice, like you said, between the catastrophic insurance

and health insurance, and the health insurance got the boot. Well,

by the time Dr. G and them come in, the noise around the country

from everybody I was hearing, everything from everybody I was

around was they wanted the health insurance, they wanted the

family insurance back. And when Dr. G come in, he was able to

find some health insurance that we could get, which we all had

trouble. There’s a bunch of us that were uninsurable because of the

injuries that we’d had. I’ve been riding 30 years and been in multiple, multiple accidents, probably 13. Of that, I’ve got a lot of

metal in my back and my leg, and I’ve had a lot of serious injuries.

But the point being, everybody around me was more interested in

the health insurance.

Gary Birzer bought up Dean Kuntz. If we had kept the catastrophic insurance instead of the health insurance, because we had

to make a choice between one or the other—I wasn’t on the board,

I was just a member that was interested because my family, my

kids were going to—it’s their future. So when the choice was made

for health insurance, Dean Kuntz was one of them that had they

not got the health insurance, at 18 months the COBRA was up,

Dean Kuntz wouldn’t have had health insurance, and when he died

last year, he probably would have died in a State institute or something because there wasn’t anything there, there was not enough

money. There is not enough money supplied to our organization in

any way, shape or form to support the insurance needs, be it catastrophic or health.

The Guild’s role needed to change because the industry was so

callous toward us. Everybody on the panel and everybody will testify to the fact that the tracks have no regard for human life or

equine life; it’s all about the dollar. The role had to change someVerDate 11-MAY-2000 09:27 Nov 28, 2005 Jkt 000000 PO 00000 Frm 00076 Fmt 6633 Sfmt 6602 24255.TXT HCOM1 PsN: HCOM1
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where along the line. We had to force the tracks to come up and

stand up to the plate and pick up their part of it.

It was brought up earlier that why don’t the jockeys not ride.

Well, when we go around the Nation to stand up and not ride, we

were told we would be sued for every dollar it cost. The attorney

general in Florida informed the Jockeys’ Guild if we was to not

ride, because we were not recognized by the NLRB we should be

sued for every nickel that it cost the industry. The industry has

used this leverage against us time and time again, so we were unable to stand up for our rights. Now, unless we make the change—

the industry is at a crossroads. If we don’t change right now and

force the change, we’re the only organization that’s strong enough

to stand up to the racetracks. Thirty-eight racing jurisdictions,

there’s probably 2 to 3 horsemen associations in every State, we’re

the only one that has a chance to help the horsemen as a general—

as one lump some. The horsemen as a whole is who we’re trying

to help. Until we stand up and force them to change, it never will.

There’s a lot of little things coming from my heart, and I’m not

reading a piece of paper. I’ll answer any questions you have later.

I just know that our leadership that we have, most of the allegations made will be proven wrong in litigation. He is looking out for

our best interests, and he’s the first person that’s come in, and the

reason he’s caught such fire from the industry is because he’s the

first person that stood up and tried to make them accountable for

the way they were treating all horsemen. And any time you try and

bring about change, like chess or war or anything, you go after the

general. You don’t like—if you want to beat the opposing army, you

get after their general. That’s the same way—that’s why they’re

after him.

I believe John Giovanni, the accusations made against him were

all false. I believe that with all my heart. I stood against the

change there. But like some of them, I couldn’t walk away because

the next generation, and I’ll take whatever heat comes because of

it. When the Birzers got hurt, that was a little brother.

[The prepared statement of David Shepherd follows:]

PREPARED STATEMENT OF DAVID SHEPHERD

After a catastrophic injury a rider’s life is changed forever. However everyday life

goes on. Home and car payments due every month. Children still need to eat. How

do you provide for your family now without an income? Then come all the medical

bills and the collection agencies, threatening you for their money. Then you need

another specialist, but told there is no more insurance. That was used up in just

a few days. The race track promised they would help, but then turned there back

on you. You realize again, in a multi-billion dollar industry you are expendable, a

piece of meat, dime a dozen. When we get hurt, its out of sight, out of mind. Please

don’t bring us out, because that is the side of the business they don’t want the public to see. Things are going to change. You can blame all the problems on Dr. G.

Call him a thief and a lier who is leading all those poor fools astray, al you want

but we will not lay down and do nothing while we are being abused any more. Thing

will change. Nothing changes but the changes!

My name is David Reed Shepherd, I have been a professional Jockey since 1975.

I won the first I rode on a recognized (Para mutual) race track, and joined the Guild

that day. In 30 years as an active guild member I have been threatened and pressured into riding under such extreme conditions as, wind chills of -50 degrees below

zero, Frozen tracks, extreme heat, wet, slick tracks, conditions unsafe for horse or

rider. I’ve spent about 13 years off with multiple injuries (broken back 3 times, neck

broke in 3 places, crushed femur &broken hip, both collar bones, shoulder surgery,

and many more broken bones and injuries). Try taking care of a family on $150 dolVerDate 11-MAY-2000 09:27 Nov 28, 2005 Jkt 000000 PO 00000 Frm 00077 Fmt 6633 Sfmt 6621 24255.TXT HCOM1 PsN: HCOM1
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lars a week. I came to the conclusion years ago, that we were expendable, a piece

of meat, dime a dozen, kill one two more will take their place. Actions have proven

me right, time and time again. As a father of one rider (Justin 19 riding in KY.),

and two more who will probably ride (Dusty 14 already galloping and breezing race

horses, and Bucki 7, barrel racing, and every other rodeo event she can get in for

her age), I could not set idly by and watch them be subjected to the same mistreatment I had been subjected to.

In 2000, knowing my oldest son would start riding races soon I knew I had to

get more involved on a national level. At that assembly in Vegas, I saw the beginnings of a hostile takeover taking place, and I spoke out against it. I felt that

McCarron, Colton, and McCarthy, had their own agenda. Over the next six months

I spent a lot of time arguing that their approach would be counter productive, and

give the perception of weakness. We should fix our problems internally. A private

internal repair, would be far less damaging than a public hostile takeover. A opinion

I voiced over and over again, to Tomey Swan and anyone else I could get to listen.

There were many, many phone calls to Chris McCarron, and Eddie King. I was unable to stop what I believed was not in the best interest of the majority of the jockeys in the nation. Unfortunately, I was right. At the next negotiations for a new

TRA contract, they would not even negotiate in good faith.

We had always been told that our medical insurance would not cover anything

on track. So when we lost it, in the spring of 2001 we could not figure out why?

It was not till long after we lost our insurance that I realized why. In 2000 Stacy

Burton was injured in Arizona on an unsafe racing surface, a terrible accident she

was very fortunate to survive. The bills over $100,000 to $1,000,000 were paid out

of our family heath insurance. No wonder we were not informed about sudden rise

in our insurance rates. I had always been led to believe all the bills due to on track

injuries were paid by the track insurance. If the racetracks had cared, even a little

bit, they would not have let this happen. Where was all the concern when we lost

our family insurance, due to an on the job injury? We were allowed to get on Cobra

insurance, for 18 months, and then we would have none. When several riders tried

to get other insurance, they found they either could not get any, or certain body

parts would be excluded. There were many of us that were uninsurable! Where was

the congressional inquiry into fact that that we had all lost our family health insurance due to a on the job injury? Again we were shown, nobody cares! In a multibillion dollar industry, the humane athletes who risk their lives, were shown we

were unimportant, expendable, not worth worrying about our personal problems.

The band-aid, after we lost our insurance, was to up the temporary disability from $100 per week, to $200 per week. And buy a $1,000,000 insurance policy for on

track accidents. We didn’t have enough money to keep our family health insurance,

but we could afford almost half a million dollars for on track insurance. It made

no sense to me. Why was I paying to work? But I still felt we should handle our

problems internally. At this point in time I was only an active member. No vote,

But I ask a lot of questions, and I voiced my opinion. I don’t know what was said

to the board members, all I know is how it was presented to me. Chris’s big thing

was that no ex-jockey was smart enough to run the guild. We need someone from

the out side to run it for us. We cannot afford Dr. G and his group, but they will

come in and help us for six months, and then stay on as advisers. My view was

ok, but then what? You don’t tear down a building without a blueprint to rebuild.

It will take someone three or four years to get a handle on this. When Dr. G and

Matrix step aside who will run the guild then? The answer was always the same,

‘‘well I don’t know we will find some one.’’ I am sure I know who that someone

would have been. Then there would have been another character assassination,

dragging us farther down, with no credibility at all. It took them till June, but they

got John Giovanni Fired, and everyone else fired.

When I got the phone call from David Moore about it, I was very angry and I

started to call Chris. But I hung up, because I knew it would not help my children,

and do more harm than good to say what I felt at that time. So I started putting

my questions together, and gathering information, about how we could move forward. There had to be a way, to pick up the pieces and make it better for the next

generation. I figured we had shot any chance for it happening during my career.

Chris tried to get me to talk to Dr. G, but I refused. I was not buying into this.

I was going to wait till we got to Austin, and take care of this face to face.

December of 2001 at Austin, Texas. I had my guns loaded for bear, but I had always been taught to learn, keep your eyes and ears open and your mouth shut. So

I would wait and see how they were going to play this out. By the lunch break on

Monday, Tomey ask me why I wasn’t asking questions, She knew I had a bunch.

I told her Dr. G had answered them, He was saying the same thing I had been saying, not what Chris and Bobby were saying. I walked up, introduced myself, and

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told Dr. G, I was never so glad to be wrong about something in my life. Eddie King

was not at the assembly, so I could not tell him that. I did tell Chris the same thing,

though events in the future proved I was only wrong about Dr. Gs involvement. I

was getting poked in the back with a pencil to make sure I stood up and volunteered

for a senator though I did not need the push. Things were going to change, and if

I did nothing, I had no right to complain about the direction they went.

Dr. G told us they could not find any theft by the old management even though

Bobby Colton said he had the proof in black and white. But the hottest subject in

Austin was health insurance for our families. We learned how we lost it (an on the

job accident). We learned that we could not afford both family, and on the job insurance. I don’t remember a single rider making an argument for on track insurance.

The Pros and Cons of both were pointed out. But the overwhelming choice was family health care.

If someone is walking through the grandstand, slips and gets hurt the racetrack will have at least $1,000,000 liability insurance. But if you are a jockey, who the

people have come to see, you are only insured for $100,000 with a $50,000 life insurance policy. That says we care and appreciate you all over doesn’t it! Dangerous

enough to have an ambulance follow you, but we don’t care enough to insure you

properly. That is reality! Nowhere in the TRA contract does it say anything about

them giving us money for insurance. It says in exchange for us giving up all our

media rights, they will give us $100,000 of on track medical insurance, and $50,000

life insurance, and $200 per week temporary disability. There is a formula for deciding how much money they will give the guild. The contract is very detailed and nowhere in it is the money earmarked for insurance. Nowhere is it even implied that

it should be used for insurance.

I was not on the board at the time, so I don’t have all the details but, I know

that everyone I talked to wanted family help care back. There was a choice to make,

a tough choice. But the right choice was made for the majority. In our occupation

it is easy to lose track of everything going on around you. This was all the talk everywhere I went for a long time. But I can understand how there could have been

a few riders that didn’t know about it. That does not mean that they were not told,

it does not mean they did not receive documentation. When you tune out everything

except what you are riding that day, you become oblivious to the world around you.

The day to day grind can get you into a rut so deep you cant see out.

In the summer of 2002 I went down and broke my neck in three places, C-l in

one place and C-2 in two places, They called it a hangman’s and told me I was lucky

to be alive. Within a couple months David Guillory, broke his neck, and Terry

Houghton, sustained a serious head injury. We were still under contract that we

agreed to the $100,000 insurance, so if we went over we were stuck for it. Less than

2 months and 3 of us are seriously injured. Terry and I are family. My son rode

his first race about then. Things had to change. The racetracks did not even care

enough to talk to us about it. When talking to Dr. G, I was emphatic that we could

not sign another contract agreeing to the $100,000 insurance. We discussed a lot

of options but the only one that made since to me was. When the contract was over,

anyone who went over would have to sue the race track for enough money to take

care of everything, and make it worth going to all the trouble. If enough lawsuits

were paid they might realize it would be cheaper to have us properly insured. That

was the only way it looked like they would listen to us. Money will not give you

back your career, but if it would get the race tracks to step up and do the right

thing. And make the injured rider a little more comfortable, it was way better than

what we had. David Guillory will never ride again. Terry Houghton was told he

would probably never be able to drive a car again. He proved all the Dr.’s wrong

and is back riding. Both of the went over the $100,000, but the guild was able to

negotiate with the Dr.’s and keep the cost down where we could handle them. I was

very fortunate, mine healed good, and I was back riding in 6 months. My point of

view came from being one of the injured riders. $1,000,000 of insurance is minimum

coverage. And the racetracks felt we should be satisfied with a sub minimum

amount of $100,000. They sure wanted all of our media rights but they were not

willing to give much in return. They wanted something for nothing.

In March I received a phone call from Deidre Panas, that Dr. G was stealing from

us. We needed to have an emergency board meeting and get rid of him. That was

just exactly what Bobby Colton was saying about John Giovanni. On the conference

call Bobby told us, he had proof in black and white, and we should vote him out

right now. I said no way we have heard this song and dance about Giovanni and

Nick Jemas We would have to all be there in person, and show us. Of all the accusations in the past, none of us had ever seen a shred of evidence, just a lot of questions and accusations. So we voted to meet in California. When we got there, financial statements and anything else we ask for was given to us. Except Bobby’s proof

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in black and white. When we ask for it he rambled on for some time telling us our

job and that we were incapable of doing it. Finally Tomey told him to quit telling

us how stupid we were and show us his proof! He stomped out, without showing

us anything. This same strategy had always worked but not this time. At that meeting I learned a lot about how we needed to operate as an organization. But more

importantly, I began to understand the personalities and traits of the people I was

dealing with. When the dust all settled, there was nothing to the accusations. Just

another power play. I began to realize that it was not about the answers, but about

the questions, if they ask the questions often enough, people would start to think

there was something to them! I still haven’t figured out what they hope to gain. If

they are successful there will be nothing left to take over. The jockeys in America

will have no credibility. The racetracks will go on screwing all horsemen, because

they have broke the strongest horseman’s organization, that could challenge their

status quo. And generations of horsemen (we are horsemen), will pay. For what?????

Shortly after that I was riding at Lone Star (Dallas). Deirdre was riding there

also I talked to her trying to piece together the reasoning for what was going on.

I tried to point out the down side of Bobby’s actions. She told me that Dr. G was

nothing but a school teacher. That Bobby was so dedicated to the guild she could

dance around in front of him in a negligee, and he wouldn’t even notice. Bobby

should be the president of the guild. He was the only one capable of running the

guild. I’ve known Bobby since 1976, and I told her I thought she was wrong.

A few days later I went to Oklahoma, to work some horses that were going to

Minnesota, where I was going for the summer. While I was home (Oklahoma), a

friend ask me to do a favor and get on a horse for him. I did and it got on top of

me. They had to life flight me to the hospital. I had crushed the femur just above

the knee, and broke it off the ball at the hip. I am still recovering from that accident. If I quit I will never get any better than I am right now, and that is unacceptable. I was injured on a Friday, the next Friday I was on a plane to meet Dr. G

in Delaware. Over the next several days we talked about a lot of things. Things he

had been told by themselves, left a lot of holes. Things I had been told by themselves did the same. But when we put 2 and 2 together, it made quite a picture.

All the Questions and accusations made more sense. We talked about everything

from Business, to Personal, Religion, Politics, Feelings, Thoughts, the past, the future. We agreed, and disagreed. We would argue till we would both understand the

others point of view. He showed me Washington DC. We left Delaware at 3:00AM

so we could be at the Lincoln Memorial when the sun was coming up. Just as he

had shown it to his children. I realized how much of our freedom we take for granted. Was reminded not just what our Constitution is, but why we have it.

When I first met Gary Birzer, his brother introduced him as little brother, a name

that stuck. His brother Alex is one of my best friends, our box’s are right next to

each others where ever we are riding. Little brothers as with son’s are going to listen to others more than family. Gary would come to me. I loved to watch his eyes

light up when he would figure out how to do what you were telling him. With great

pleasure and pride I watched him becoming a good little race rider. All the feelings

turned to pain when he was injured. I was on the phone to Alex all the time, I was

determined that he not fall through the cracks. He was not the first rider injured

with no contract. Chris Quinn, at Fairmont Park, He later died of complications.

Remi Gunn, was injured at Ellis Park. She is paralyzed due to her injury. Still the

Industry thumbed their nose at us, and refused to even talk to us. We were not

ready to make a stand, but I insisted, we had a racetrack, making millions of dollars

a week with the slots, that had never given a dime to the guild. Mountaineer is notorious for having extreme conditions, a terrible racing surface, and threatening and

pressuring the riders to ride over it. Here was a very personable rider who everybody loved. I told Dr. G and Albert, here is our Alamo. We need to be there to help

any way we can. I was on the phone to Alex almost daily. But I’m the one how

should have been there. Dr. G and Albert could not prepared for the emotional

storm they walked into. The more they tried to explain, the more they were misinterpreted, no matter what was said only the negative was heard. I was the one

who should have been there. But I was struggling with the pain my own way, and

was not where I should have been.

When Tony D’Amico was injured in Kentucky, and the jockeys ask for help, management literally turned their backs on them, and then refused to meet with them.

When I arrived at Churchill on Friday to visit my son, I was told all the riders had

signed a petition not to take calls for the next entry day, if management would not

talk to them. I advised against it for several reasons, but they were dead set. I could

not argue with how they felt. How many times do you get screwed before you quit

laying down and taking it. When it all went down my son ask me about it. I ask

him if he signed the petition, he said yes, every single rider did. I told him, all we

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have is our word. You say what your going to do, then you do what you say your

going to do. He did.

Churchill management then showed there concern and compassion, by ruling off

the riders that had shown the audacity, to challenge their compete authority. After

all they had already informed us that the Constitution did not apply to horse racing.

On Saturday night I was at Hoosier Park, the riders there were all upset that they

were not included. I explained things to they and ask them please don’t get involved. Let it be a Kentucky thing. The rest is history.

At Gulfstream Park, Gary Boulanger was injured. When the riders called a meeting with management, management actually showed up. They upped the insurance

to $500,000, temporarily. Gary was told that all his bills would be paid. Of course

when it came to keeping their word to Gary, he was told NO!!

Two very similer sets of circumstances. Two very different ways of handling them.

Both show how very little regard management has for humane life!

And then to top it all off they put there media machine to work. The best way

to stop an uprising is to destroy the leadership. And they pulled out all the stop’s

to do it. And they had help from within our own ranks. They have gone to great

lengths to find even the appearance of wrong doing. They have even gotten the federal government involved. In all the interviews, we have not been ask about health

and welfare issues. I know what the title of the hearings are, but everything I’ve

seen and heard Paint an entirely different picture.

Please don’t tell us you interested show us you are interested. A National work

comp would be the least expensive and most efficient, way to help all horsemen.

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Mr. WHITFIELD. Thank you, Mr. Shepherd. Your time has expired. Thank you very much for your testimony.

Mr. Colton, you’re recognized for 5 minutes.

TESTIMONY OF ROBERT E. COLTON

Mr. COLTON. Mr. Chairman, distinguished members of the committee, I am both pleased and ashamed to appear before you today.

I’m ashamed for two reasons: That the collective talent within the

horseracing industry cannot solve on-track injury insurance, and I

played an instrumental role in placing Wayne Gertmenian as the

Guild’s current president. Concerning Gertmenian, I say this because in my view he’s alienated the entire racing industry to the

extent jockeys no longer have a respected representative to voice

their concerns. However, I am grateful to the committee’s attention

to the issue of on-track insurance. I believe this hearing could

someday lead toward creating a nationwide program that would include insurance for all backside workers as well as national uniform safety standards that would help to reduce injuries.

Our sport is incredibly dangerous, and, like most jockeys, I have

suffered numerous injuries. In my most traumatic incident, I was

dropped in a race and trampled. Several bones were broken, including my neck. That left me temporarily paralyzed. It was brief, but

nonetheless terrifying.

In my written testimony I elaborate my opinions and included a

simple proposal for resolution. The debate here is not that coverage

is sorely needed, but rather who carries the physical responsibility.

In this business, working with high-spirited race horses where anything can get you hurt, all the players have a joint responsibility

to ensure no one is denied on-track benefits.

Mr. Chairman, I have struggled writing this testimony covering

my involvement with the Jockeys’ Guild. How do I explain in 5

minutes what took place over a few years? Furthermore, this committee will hear narratives from many individuals who were involved with Gertmenian in different periods of time. To my recollection I can’t recall the last time Gertmenian gave an accurate

statement. The Guild is skilled at stonewalling. They often don’t

provide factual documents and instead dispute claims with the I

said-you said spin. In my written testimony verifiable facts are provided.

In regard to Gertmenian’s empowerment, I was a part of a group

of members who under his direction led the charge to replace longtime manager John Giovanni. Gertmenian orchestrated every detail of that takeover. My involvement with the takeover was the

biggest mistake of my career, a mistake I deeply regret and have

tried to rectify.

The largest controversy surrounding this matter is why and by

whom the $1 million on-track policy was canceled. In December

2001, at the Guild’s annual assembly, Gertmenian stated the Guild

was broke and a few months away from insolvency. He further

stated because of the financial problems, his staff was attempting

to renegotiate the on-track policy while shopping for another. Unfortunately, no minutes of the 2000 assembly were made transparent. There are, however, minutes of the 2003 assembly where

he repeated his 2001 claim. He stated, quote, now by the time you

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hired us to come and take a look at these books, you were down

to about $800,000, end quote. He further claimed the Guild had

lost everything and was a very few months away from insolvency.

To counter Gertmenian’s claims are IRS returns filed for 2001.

In these filings the Guild and its disabled fund reported combined

assets of $5 million. These were mostly cash and investments.

To say the membership was deceived is an understatement. With

regard to the on-track insurance policy, no vote was ever taken by

the board, and no authority was ever granted to the Guild management to cancel that policy. Mr. Chairman, I was a member of the

Board at the time. The jockeys of the Guild would never get rid of

the most vital benefit of our membership. Instead, this decision

was made by people who never put their lives in danger on a saddle on a racehorse.

Despite Gertmenian’s testimony in Federal litigation that the

Board canceled the policy, many of the Board members have publicly disputed this. Some of them are here today. Regardless of any

of Gertmenian’s claims, no written notification was ever mailed to

members informing them of the cancellation.

In my written testimony I cite numerous problems within the

Guild concerning their integrity and truthfulness. The following incident is just one such occurrence. After retiring from riding at the

end of 2002, I worked briefly for Gertmenian. I was being trained

to manage the Guild’s finances. On audits I was preparing,

Gertmenian instructed me to double-bill the States of California

and Delaware for benefits which the Disabled Jockeys’ Fund had

already reimbursed the Guild for. I refused the billing, to believe

unethical.

Mr. WHITFIELD. I’m sorry, would you repeat that?

Mr. COLTON. I refused, believing the billing to be unethical.

Gertmenian refuted my beliefs, informing me I was, quote, undereducated and did not understand innovative accounting, end quote.

I alerted then-chairman Tomey Swan with my concerns, along

with other problems recently discovered. Her response was to close

the financials to all members including the Board with the exception of three handpicked by Gertmenian. Closing the financials violated the Guild’s bylaws and the Department of Labor regulations.

The unethical conduct I witnessed led me to quit my job in frustration. After my departure, the Guild immediately started a vicious campaign against me. I was eventually expelled from the

Guild, falsely accused of theft and vandalism. Guild management

stated on numerous occasions to both members and the public that

criminal charges were filed against me. To this day no criminal

charges have ever been filed against me. I did attempt to clear my

name and sued for defamation. Unfortunately, I could not match

the Guild’s financial resources and had to settle.

In closing, Mr. Chairman, I would like to make a public statement to Mr. John Giovanni. John, you and your staff did absolutely

nothing wrong, and I am truly sorry for my part in your removal

as national manager of the Jockeys’ Guild.

Mr. Chairman, I thank the committee for bringing attention to

the lack of adequate on-track injury insurance. Labor organizations

have a long history of internal strife. I would hope that these

issues—I apologize here. I hope that the issues remain a part in

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your inquiry. The needed benefits for all backside workers should

not be delayed nor denied because of what has taken place inside

of the Jockeys’ Guild. I welcome further questions.

[The prepared statement of Robert E. Colton follows:]

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Mr. WHITFIELD. Mr. Colton, thank you.

At this time I recognize Mr. McCarron for his opening statement.

TESTIMONY OF CHRIS McCARRON

Mr. MCCARRON. Thank you, Mr. Chairman.

Mr. Chairman and distinguished members of the subcommittee,

thank you for the invitation to participate in this hearing. My career as a professional jockey began in 1974 and continued until I

retired on June 23, 2002. During that 28-year period I rode 7,141

winners, the seventh highest among all jockeys, and had purses

range of over $264 million, then the all-time leader. My record includes two Kentucky Derby winners, two Preaknesses, two Belmonts and nine Breeders’ Cup winners. Before retiring at age 47,

I had the good fortune of winning virtually every major race in

North America at least ones.

As you know, Mr. Chairman, I moved to Kentucky to establish

a school to train jockeys. It’s the first of its kind in this country.

Jockeys engage in one, if not the most, hazardous of occupations.

You all know that. On-track injuries have left jockeys victims of fatalities and permanently disabling injuries. Over 180 jockeys have

been killed in racing or training accidents since the Guild began

keeping records in 1940. I’m not sure how many permanently disabled jockeys there are, but it’s many.

On a personal note, I broke both my arms and my leg—both my

legs and my right arm in a spill in 1990, and as most jockeys

would, I considered it just a minor injury. I returned to the races

87 days later with a rod in my left femur and a pin in my arm.

Without doubt, as you have seen here today, jockeys have a major

incentive to return to work as soon as possible not only because of

our temperaments, but because even in the five States which provide worker’s compensation insurance, it is very difficult to provide

for a family on those weekly benefits.

I joined the Jockeys’ Guild soon after I started riding professionally. I’ve always been an active supporter of efforts to persuade

management to provide safe and helpful working conditions. While

a jockey, I prevailed on Santa Anita Park to install an audible

emergency alert system. I have also endorsed the use of safety

rails, complaining to management when hot boxes were unsanitary,

endorsed rules to require jockeys to wear safety vests, worked to

improve padding inside the starting gate, and served on various

committees to examine equine medications.

Jockeys know they face significant dangers every time they

mount a horse on the track and that some injuries are inevitable.

What is needed is a system of—some system of insurance to provide jockeys and their families appropriate assistance when a serious or catastrophic injury occurs.

I have been actively involved in attempting to achieve that result

throughout my tenure with the Jockeys’ Guild. I served as an elected member of the Board of Directors for more than 10 years and

was elected treasurer in 2001. In 1987, I cofounded the Don MacBeth Memorial Jockey Fund, which assists disabled jockeys and

their families. So I am very pleased that the subcommittee is focusing on examining on-track injury insurance and other health and

welfare issues.

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The regrettable fact is that as of today no such national plan exists. That should be the starting point for your consideration. The

fight to provide catastrophic insurance has been complicated and

contentious. As Dave Shepherd had already stated, this has frustrated jockeys for many years. As a last result, in late 1994, with

the involvement of the Jockeys’ Guild managing director John

Giovanni, the jockeys decided to conducted a nationwide refusal to

ride their mounts on January 11, 1995. As I recall, the track owners persuade—succeeded in persuading the attorney general of

Florida to threaten the Guild with a massive antitrust damage lawsuit unless it canceled the planned action. The jockeys were forced

to back down. I was among the most unhappy because I believed

strongly in the righteousness of our cause.

The jockeys, acting through the Guild, were forced to continue to

purchase and pay for out of its treasury both an on-track catastrophic group insurance policy for its members and their families

and a group health insurance policy. To meet that financial burden,

the Guild, among other things, solicited written authorizations

from individual jockeys to license for a fee their media rights to the

Thoroughbred Racing Association whose members consisted of numerous racetrack owners. Guild representatives would periodically

negotiate an agreement with TRA in exchange for jockeys’ media

rights for an annual payment to the Guild. For a number of years

those agreed-upon payments covered the premium costs of the

Guild’s two policies; however, in recent years the cost of health insurance soared to record high levels, and the payments the Guild

received from the TRA did not keep pace.

Mr. Giovanni recommended that effective April 1, the Guild

should—April 1, 2001, the Guild should cease offering health insurance for its members not covered by the California or Delaware

health insurance plans. The Guild’s nine-member executive committee, of which I was then a member, approved that recommendation. As I recall, members then received a written notice that they

would be responsible for their own health insurance. The Guild’s $1

million on-track accident insurance policy continued in full force.

I believe that the Guild’s financial problems were partly attributable to the fact that Mr. Giovanni, a former jockey himself and

not a professional negotiator, was at a disadvantage when negotiating against the TRA’s sophisticated attorneys and financial advisors. For that and other reasons, in the spring of 2001 I thought

that Guild members would be better served if the national managing director position was filled by a professional. That is the

model I have been told that entertainment guilds in most sports

unions have been following for years with great success.

In 1994, I was introduced to Dr. Wayne Gertmenian through my

daughter. He was an economics professor at Pepperdine University,

and I understood he had significant negotiating experience in handling multimillion dollar international business transactions. In

fact, his resume on the Pepperdine Web site states, and I quote,

‘‘Dr. Gertmenian served the Nixon and Ford administrations as the

chief detente negotiator in Moscow for the Chairman of the National Security Council.’’

Further, I was impressed with the manner in which he expressed

his views, his stated interest in learning about the problems jockVerDate 11-MAY-2000 09:27 Nov 28, 2005 Jkt 000000 PO 00000 Frm 00148 Fmt 6633 Sfmt 6602 24255.TXT HCOM1 PsN: HCOM1
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eys faced and his stated desire to help us resolve them. This led

me to recommend to my fellow committee members that we replace

John Giovanni with Dr. Gertmenian.

In early June 2001, a majority of the committee, on a conference

call, voted to replace Mr. Giovanni with Dr. Gertmenian. I would

like to—at this point in time, I would like to offer a public apology

to Mr. Giovanni and his staff for the undeserved and inappropriate

manner in which they were treated by Matrix Capital Associates.

Regrettably, I thereafter became dissatisfied with Dr.

Gertmenian in several other important respects. First, he continually refused Board member Jerry Bailey’s request for his resume.

I found Dr. Gertmenian’s explanation that confidential information

was involved totally unacceptable.

Second, the terms of his contract that Dr. Gertmenian was insisting upon for Matrix Capital were unreasonable.

Third, Dr. Gertmenian’s presentations at several jockey meetings

I attended demonstrated a bad habit of exaggerating the true nature of the problems jockeys face. I shared many of my reservations

with him, but his responses were extremely negative. I also shared

my reservations with Board chair Tomey Jean Swan and executive

committee member Dave Shepherd.

Bringing Dr. Gertmenian into the mix was the worst mistake I

have ever made.

Finally, I am absolutely certain that I did not learn that Dr.

Gertmenian had not renewed, effectively canceling, the Guild’s ontrack catastrophic insurance policy in April 2002 until 2 years

later. I learned of it in July 2004 upon reading various articles

shortly after Gary Birzer’s horrible on-track accident in West Virginia. I was stunned to learn of these circumstances. I know that

at no time prior to my resignation from office in June 2002 did the

committee take any action to renew that policy, nor did Dr.

Gertmenian ever notify the jockeys that the policy had been nonrenewed or that they no longer were insured against on-track injuries in those States covered by the policy that had lapsed.

I want to assure the committee that I never would have voted

to non-renew that policy. Whatever led Dr. Gertmenian to do so,

I believe that he took that action on his own.

Having described this unfortunate turn of events, I have one allimportant concern. Please do not lose sight of the fact that there

remains a critical need to ensure that jockeys and their families receive the protection against catastrophic injuries they most assuredly are entitled to.

I welcome your assistance in achieving this goal, and I am happy

and ready to answer any questions you may have of me.

[The prepared statement of Chris McCarron follows:]

PREPARED STATEMENT OF CHRIS MCCARRON

Mr. Chairman and Distinguished Members of the Subcommittee: Thank you very

much for inviting me to participate in this hearing. I am appearing on my own behalf. As my attached resume describes, my career as a professional jockey began in

1974 and continued without interruption (with the exception of several injury recovery periods) until I retired on June 23, 2002. During that 28-year period I rode

horses at numerous major and minor race tracks throughout the United States (including Maryland, New York, New Jersey, Delaware, and California) and North

America. Among the accomplishments of which I am most proud, as of my retirement date, I had ridden 7,141 winners (the 7th highest among all jockeys) and had

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purse earnings over $264 million (then the all-time leader). Horse-racing fans would

appreciate that my record includes two Kentucky Derby winners, two Preaknesses,

two Belmonts, six Triple Crown wins in total, and nine Breeders’ Cup winners. Before retiring at age 47, I had the good fortune of winning virtually every major race

in North America at least once.

Since my retirement, I have remained actively engaged in the unique world of

horse racing. As you know Mr. Chairman, I am currently involved in the exciting

and challenging process of establishing a school to train jockeys in Lexington, KY—

a first of its kind in the United States.

Based on my personal experiences as well as a simple look at the statistics, I am

acutely aware that professional jockeys engage in one of—if not the—most hazardous occupations. This should not come as a surprise to anyone. I fully expect that

each member of the Subcommittee and the general public recognizes this reality.

On-track injuries incurred during the course of employment have left jockeys the

victims of fatalities (over 100 jockeys have been killed as a result of a racing or

training accidents since the Jockeys Guild of America began keeping records in

1940, at an average of two per year), permanently disabling injuries (there are currently over fifty permanently disabled jockeys), and a disturbingly long list of serious injuries that have had both short-term and cumulative effects on virtually every

bone in their bodies. According to a study conducted by and recorded in the Journal

of the American Medical Association in the late 1990’s, jockeys experienced on a nation-wide basis 35 accidents per week. That’s 1,820 per year reported to the firstaid rooms at tracks around the country. The injuries range from minor to permanently disabling catastrophes. To provide a perspective with regard to how most

jockeys have viewed the degree of their injuries, I broke both my legs and my right

arm in a spill in 1990 and considered it just a ‘‘minor’’ injury. I knew I would be

back riding and, in fact, I returned to the races only 87 days later with a rod in

my left femur and a pin in my arm. Like most jockeys, I am very impatient when

it comes to returning to the saddle after an injury, for two reasons: First, because

we are not earning any income to support our families; and second, because we hate

to see our mounts ridden by others. Additionally, there are only five states (California, New York, New Jersey, Maryland and Idaho) that have laws requiring owners and/or trainers to provide worker compensation insurance for jockeys. And even

where such coverage applies, the reality is that it is very difficult to care for a family on the weekly compensation provided by such coverage. Consequently, jockeys

have a major incentive to return to work ASAP.

I joined the Jockeys Guild soon after I started riding professionally. Throughout

my career, I have been actively involved in supporting efforts on behalf of myself

and fellow jockeys to persuade management to provide more safe and healthful

working conditions, i.e. endorsing the implementation of safety rails, being involved

in judging unsafe track conditions, complaining to management when our ‘‘hot

boxes’’ (steam rooms) are unclean and unhealthful, endorsing a requirement that

jockeys wear safety vests while riding, and improving the padding inside the starting gate. Jockeys are not stupid. They know they face inherent dangers each time

they mount a horse to participate in a race.

Experience shows that, to the extent these dangers cannot be completely eliminated, serious injuries—some catastrophic—will continue to occur periodically. In

those instances, some system of insurance must be in place to provide jockeys and

their families appropriate assistance in their times of dire need. In this vein, I have

also been actively involved in attempting to achieve that result for my fellow jockeys

during my tenure first as a member and later as an officer of the Jockeys Guild

of America. (I was elected to the Board of Directors in the early 1980’s, re-elected

to the Board in 1998 or 1999, and then elected Treasurer in 2001.) An example of

my commitment to this cause is that in 1987 I co-founded, with my wife Judy and

actor/comedian Tim Conway, the Don MacBeth Memorial Jockey Fund, which financially and emotionally assists disabled jockeys and their families. We have raised

over $2 million to date and assisted over 1,600 jockeys.

So, I am especially pleased that a major focus of the Subcommittee’s attention involves ‘‘Examining On-Track Injury Insurance and Other Health and Welfare

Issues.’’ The lack of a national on-track accident plan should be the starting point

for your investigation and consideration. The Subcommittee may find it hard to believe that as of today no such plan exists. That is, however, the regrettable fact.

Now let me offer some background information to assist you in understanding

‘‘why’’ none exists. The fight to provide jockeys and their families adequate catastrophic insurance for on-track injuries has proven to be complicated and contentious. In plain words, management—race-track owners, horse owners and trainers—

has refused to a great degree to accept the responsibility for providing such insurance. For many years this has frustrated me and my fellow jockeys. Our level of

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frustration reached a peak in late 1994. After ongoing discussions among jockeys

and with the involvement of the Guild, through then National Managing Director,

John Giovanni, the jockeys decided as a last resort to conduct a nation-wide refusal

to ride their mounts on January 1, 1995. Our objective was to call the public’s attention to our plight and specifically to pressure race-track owners to provide the revenues necessary to finance the cost of on-track insurance coverage for jockeys and

their families. As I recall, shortly before the scheduled work stoppage the track owners succeeded in persuading the Attorney General of Florida to threaten the Guild

with a massive anti-trust damage lawsuit unless it cancelled the planned action.

Mr. Giovanni then advised the Guild officers that we were facing a perilous situation and the decision was made to call off the event and ride our mounts on that

date. I was among the most resistant and the most unhappy because I believed

strongly in the righteousness of our cause.

What this meant was that the jockeys, acting through the Guild, were reduced

to purchasing and paying for (out of the Guild’s treasury) both an on-track catastrophic group insurance policy for its members and their families and a group

health insurance policy. To meet the resulting financial burden, the Guild, among

other things, solicited and obtained written authorizations from individual jockeys

to license for a fee their ‘‘Media Rights’’ (publicity rights to our faces, pictures, images and names) to the Thoroughbred Racing Association (‘‘TRA’’), whose members

consisted of numerous race-track owners. In turn, Guild representatives would periodically negotiate an agreement with TRA representatives with the goal of exchanging the jockeys’ media rights for as large an annual payment to the Guild as possible. For a number of years those agreed-upon payments from the TRA were sufficient to cover the premium costs of the two major policies obtained by the Guild.

However, in recent years, the cost of health insurance soared to record high levels

and the payments we received from the TRA did not keep pace. From 1998 to 2000

the gap between the negotiated payments obtained from TRA and premium costs

became larger and larger.

This ultimately resulted in a recommendation from National Managing Director,

Mr. Giovanni, that effective April 1, 2001, the Guild should cease offering health

insurance for active members not covered by the California or Delaware insurance

plans. The nine-member Executive Committee of the Guild (of which I was then a

member) approved that recommendation, that group policy was cancelled, and, as

I recall, members were notified in writing that they would thereafter be responsible

for obtaining and paying for health insurance for themselves and their families. The

fact that the Guild cancelled that policy had no effect on its $1 million on-track accident insurance policy which continued in full force.

It was my judgment that the financial problem which caused the Guild to cancel

the health policy was, in large measure, attributable to the fact that Mr. Giovanni,

a former jockey himself and not a professional negotiator, was at a major disadvantage when conducting negotiations against the TRA’s sophisticated attorneys and financial advisors. In particular, I was dissatisfied that Mr. Giovanni failed to prevail

upon the TRA to finance the increasing premium costs of the Guild’s policies.

For that and other reasons, in the spring of 2001, I made the judgment that Guild

members would be better served if the National Managing Director position was

filled by a professional. That is the model, I have been told, that the entertainment

guilds and most sports unions have been following for years.

In 1994 I was introduced to Dr. Wayne Gertmenian through my daughter. I was

aware that he was an Economics Professor at Pepperdine University and I understood that, as well, he had acquired significant negotiating experience in handling

multi-million dollar international business transactions. His resume on Pepperdine’s

website states: ‘‘Dr. Gertmenian served the Nixon and Ford administrations as a

chief detente negotiator in Moscow for the chairman of the National Security Council, as an emissary to Teheran for the Secretary of Commerce, and as a special assistant to the Secretary of Housing and Urban Development. Today, he is a distinguished professor at two universities in China and advises Russian leaders on a free

market economy.’’ Further, based upon a number of informal discussions, I was impressed with the articulate, confident manner in which he expressed his views, his

stated interest in learning about the problems jockeys face, and his stated desire

to help us resolve them. This led me to recommend to my fellow Executive Committee members that we replace John Giovanni with Dr. Gertmenian.

During the course of an Executive Committee conference call meeting in early

June 2001 we discussed the question whether to replace Mr. Giovanni with Dr.

Gertmenian. A number of Mr. Giovanni’s supporters disagreed with my position but

ultimately a majority of the Committee voted to replace Mr. Giovanni with Dr.

Gertmenian. To conduct the broad spectrum of administrative, financial, and recordkeeping functions that the Guild staff performs on a daily basis, Dr. Gertmenian

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hired and utilized the services of employees of Matrix Capital Associates, Inc., an

organization he established. The staff worked out of the Guild’s headquarters in

Lexington, Kentucky until the Guild moved to Monrovia, California in late 2002.

Commencing several months after Dr. Gertmenian assumed his duties, I became

dissatisfied with his actions in several important respects. First, I was unable to understand why he continually refused fellow Board member Jerry Bailey’s request

that he provide a comprehensive resume detailing his credentials and his career activities. I found Dr. Gertmenian’s explanation that confidential information was involved totally unacceptable. Second, I became concerned that the fees Dr.

Gertmenian was insisting upon in his contract with the Guild covering services to

be rendered through Matrix Capital were unreasonably high. In my capacity as

treasurer, I prevailed upon him to make certain adjustments but, in retrospect, they

should have been more extensive. Third, Dr. Gertmenian’s presentations at several

jockey meetings I attended were troubling to me. He had a bad habit of exaggerating his credentials and his ability to achieve the jockeys’ goals. Thus, at least

as early as the time that I retired as a jockey and resigned as Guild Treasurer (June

2002), I had serious reservations about Dr. Gertmenian. I had shared many of my

reservations with him but his responses to me were extremely negative, to say the

least.

Next, I want to state with absolute certainty that I did not learn that Dr.

Gertmenian had non-renewed (effectively canceling) the Guild’s on-track catastrophic injury policy in April 2002 until two years later. Specifically, I first learned

of the non-renewal upon reading various articles shortly after Gary Birzer’s horrible

on-track injury in West Virginia in July 2004. I was stunned to learn of these circumstances. I know that at no time prior to my resignation from office in June 2002

did the Committee take any action to non-renew that policy. I want to assure the

Subcommittee that I never would have voted to do so. The only conclusion that I

can offer, without knowing what led Dr. Gertmenian not to renew the on-track insurance policy, is that he did so on his own.

Having described this unfortunate turn of events, I have one all-important concern: I would implore the Subcommittee not to lose sight of the fact that there remains a critical need to take all appropriate steps to ensure that jockeys and their

families receive the requisite catastrophic insurance they most assuredly are entitled to. I welcome your assistance in achieving this worthy goal.

Mr. WHITFIELD. Mr. McCarron, thank you, and I want to thank

all of the witnesses for your testimony.

Obviously, there are a lot of issues out there that we are considering for the macro health and welfare of the jockeys in the future.

Is there anything that can be done at the Federal level to assist

in that, to the micro aspects of trying to determine precisely what

happened to a fellow like Gary Birzer, who thought he had insurance for on-track accidents and then realized that he didn’t.

And Mr. Giovanni, I would like to start with you because you

were the previous national manager of the Jockeys’ Guild. And it’s

my understanding that in, I guess, April 2001, you took out a policy for on-track injuries that had already been determined by your

Board or by the appropriate body that you were not going to able

to afford the family health policy or the off-track policy and the ontrack policy, that you would only do one; and your Board made the

decision to maintain the on-track policy for catastrophic injury. Is

that correct?

Mr. GIOVANNI. Somewhat. If I may, sir, the Jockeys’ Guild has

always negotiated with the racing associations, and the racing associations provided the first $100,000 worth of coverage anytime

there was an accident on track.

What we did was—through our negotiations we also received dollars from the racing associations that we put into a special fund.

Those dollars were used to offset the costs for health insurance,

and the health insurance plan picked up all of the costs of any of

our members who had an injury on track, and it went beyond the

first $100,000 that was provided by the track.

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So our health insurance did two things: It protected the families,

and it also protected the jockey who was injured on track and his

expenses went beyond $100,000.

In the year 2000, as Mr. Bailey alluded to, we lost some money

in the stock market. It was a bad year; we had a number of injuries

that went over $100,000—we had one in particular; it was over

$600,000—and we had a bunch of health claims from the members.

We got hit with a 43 percent increase for the health coverage. We

couldn’t afford it, so after a number of meetings with the executive

committee, what we decided to do was to take the money that we

would normally buy the health insurance with and buy a policy

that would protect the jockeys when they were working on the

racetrack so if anything happened, they would be covered for a million dollars, at least, in medical.

We took everybody and put them on COBRA. We sent them all

letters and notified them that they were eligible for COBRA, what

to do, how to do it; and this way they could make payment directly

to Union Labor Life Insurance Company——

Mr. WHITFIELD. And that was for the family policy?

Mr. GIOVANNI. Yes, sir. And they could pay directly and keep the

coverage for at least 18 months. In the meantime, I felt that would

give us an opportunity to try to renegotiate another plan, and everybody would be covered.

Mr. WHITFIELD. Okay, so everyone was covered with this ontrack policy. And do you recall what the premium was for that policy?

Mr. GIOVANNI. The premium was $443,000.

Now this plan covered all of the jockeys who were riding—who

would ride in a State that was not covered by Worker’s Compensation. And it did not—and it was a patchwork, sir, because——

Mr. WHITFIELD. Four States did Workmen’s Comp, correct?

Mr. GIOVANNI. Yes. Because there were other—two States that

we received funding from, we lobbied in California and Delaware

and received funding from those States. In those States the jockeys

did not lose their health insurance coverage; they were able to keep

that. And that plan also covered them when they fell on a racetrack and the expense went beyond $100,0000.

So the million dollar policy covered them if there was no coverage by the on-track—by the health insurance program or by

Worker’s Compensation.

Mr. WHITFIELD. So you had Workman’s Comp in four States, and

you had Delaware and California in this special deal?

Mr. GIOVANNI. That’s correct.

Mr. WHITFIELD. And the policy was $443,000 a year?

Mr. GIOVANNI. Yes, sir.

Mr. WHITFIELD. And at that time, when you were the national

manager, how many mounts did a jockey have to have per year to

be eligible to be a member of the Guild?

Mr. GIOVANNI. They had to ride 100 a year. If they failed to ride

100 horses a year for 2 consecutive years, then we put them on the

retired list. They were no longer—we considered them no longer an

active member.

Mr. WHITFIELD. They had to have 100 a year?

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Mr. GIOVANNI. Yes, sir. If they failed to ride 100 for 2 consecutive

years, then they were retired. But if they were injured and their

injuries would extend 6 months or more, they were forgiven that

year. So——

Mr. WHITFIELD. Now, how much would you say you received each

year, at the time you were there, from the racetracks, in dollar

amount?

Mr. GIOVANNI. I believe it was $2.2 million.

Mr. WHITFIELD. And then how much roughly were you receiving

in dues from the jockeys themselves?

Mr. GIOVANNI. About the same amount, maybe a little more.

Mr. WHITFIELD. That is 2.2?

Mr. GIOVANNI. Yes, sir.

Mr. WHITFIELD. Now, Mr. Shepherd made a comment in his

opening statement that as your tenure was coming to an end at the

Jockeys’ Guild, the Jockeys’ Guild was basically bankrupt; is that

true?

Mr. GIOVANNI. No, sir.

Mr. WHITFIELD. What was the state of the Jockeys’ Guild at that

point?

Mr. GIOVANNI. What we did was, when we couldn’t afford the

health insurance, we restructured the mount fees, and everybody

went from an $8 member to a $3 member. When I say $8 member,

we used to collect $8, $5 came to the Jockeys’ Guild and $3 went

into a savings account in each individual jockey’s name. And what

we did was, we reduced it to strictly $3; that’s all they had to pay,

and that leveled us off——

Mr. WHITFIELD. What were the assets at the time you left?

Mr. GIOVANNI. I think there was $1.6 million in a stock portfolio,

stock account with—I’m trying to think, Manhattan——

Mr. WHITFIELD. Amalgamated?

Mr. GIOVANNI. No, sir.

Mr. WHITFIELD. All right——

Mr. GIOVANNI. First Manhattan. There was $1.6 million there,

there was $1.3 million in the Disabled Jockey Fund that was separate and distinct; but that’s $2.9 million right there.

Mr. WHITFIELD. So from your perspective it was not close to

bankruptcy?

Mr. GIOVANNI. No, sir. We had rearranged things, but we were

not bankrupt.

Mr. WHITFIELD. Okay, okay.

Now, one of the key points that we were looking at—as I said,

we’re looking at some macro issues. But one of the microissues relates to the actual decision to allow the policy that you all continued on the track, which was set to expire March 31, 2002—who

made the decision to allow that policy to lapse or to not renew that

policy?

Mr. GIOVANNI. I don’t know, sir, I can’t answer that question. In

2001, in June, I paid for the program, the program was paid

for——

Mr. WHITFIELD. Now, in tab 85, which you probably do not

have—there is the binder. Tab 85 is a tab that is a legal action between Mr. Edwin King and Gary Donahue versus the Jockeys’

Guild. And on page 5 of that legal document, question 6, this was

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an interrogatory or deposition taken of Dr. Gertmenian, and it

says, ‘‘List the name and title of each individual who was involved

in any way in the decision to allow the policy of insurance referenced’’—that is, the on-track policy—‘‘to lapse in 2002.’’ And the

response—and this was, of course, under oath—was given by Dr.

Gertmenian. And his answer here is that the decision was made by

the defendant, the Jockeys’ Guild Board of Directors.

Is that what your document says there?

Mr. GIOVANNI. Yes, sir, it does.

Mr. WHITFIELD. Now, I understand we have with us today three

members of the—who were members of the Board of Directors at

that time. One is Mr. McCarron.

Is that true, Mr. McCarron, were you a member of the Board of

Directors at that time?

Mr. MCCARRON. Yes, sir, I was.

Mr. WHITFIELD. And Mr. Colton, were you a member of the

Board of Directors at that time?

Mr. COLTON. Yes, sir, I was.

Mr. WHITFIELD. Ms. Swan, were you a member of the Board of

Directors at that time?

Ms. SWAN. Yes, I was.

Mr. WHITFIELD. Was there a meeting of the Board of Directors

during that timeframe to discuss whether or not that policy would

be allowed to lapse or be renewed or whatever?

Ms. Swan, what about it, was there a meeting of the board?

Ms. SWAN. I don’t remember that. I remember we had a lot of

meetings where we discussed the problems with the health insurance and——

Mr. WHITFIELD. Yes, but my question is, was there a meeting of

the Jockeys’ Guild Board of Directors to discuss this one issue

about allowing the policy to lapse or whether to renew it or what

to do about it? And did you vote on it?

Ms. SWAN. I don’t remember.

Mr. WHITFIELD. You don’t remember?

Ms. SWAN. I don’t remember.

Mr. WHITFIELD. Okay. So you don’t remember the meeting. And

do you remember voting on it?

Ms. SWAN. I don’t.

Mr. WHITFIELD. You don’t.

Mr. Colton, was there a meeting?

Mr. COLTON. Not to my recollection, sir. The only knowledge I

had of it was at the 2001 assembly where there had been discussion.

Mr. WHITFIELD. So did you vote on this?

Mr. COLTON. There was no vote there.

Mr. WHITFIELD. And, Mr. McCarron, what about you?

Mr. MCCARRON. No, Mr. Chairman, I never voted on that. I

never would have voted on that.

Mr. WHITFIELD. And did you ever attend a meeting of the Board

for the purpose of taking this issue up?

Mr. MCCARRON. No, sir. There was no such meeting, to my

knowledge.

Mr. WHITFIELD. So we have three members of the Board of Directors here, and I’m assuming that you all would have been advised,

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as members of the board, if there was a meeting of the Board to

discuss this issue; is that correct?

Mr. MCCARRON. Yes.

Mr. WHITFIELD. Now, who would have the authority to make

that decision without the board’s approval?

Mr. McCarron, do you know?

Mr. MCCARRON. I don’t know off the top of my head. I would

have to review the bylaws of the Guild, which actually were

changed when Dr. Gertmenian took over.

Mr. WHITFIELD. Okay.

Ms. Swan, you’re still with the—you work at the Jockeys’ Guild

now; is that correct, Ms. Swan?

Ms. SWAN. Yes, I’m vice chairman. And it’s Swan, sir.

Mr. WHITFIELD. I’m sorry, Ms. Swan.

Do you have access to any Board meetings in which that decision

was made in your possession?

Ms. SWAN. I know that we did discuss it extensively, the health

and the catastrophic, at the 2001 Board meeting; but to answer

your question——

Mr. WHITFIELD. Are there any minutes to that meeting? Do you

have minutes to that meeting?

Ms. SWAN. We would have to check with the Guild office.

Mr. WHITFIELD. Well, we’ve asked for those minutes.

Ms. SWAN. The 2001 meeting you’re talking about? You’re talking

about the 2001——

Mr. WHITFIELD. The meeting in which the decision was made to

drop the policy.

Ms. SWAN. No, I don’t know.

Mr. WHITFIELD. Okay, okay. My time has expired.

I recognize the gentleman from Michigan, Mr. Stupak.

Mr. STUPAK. Thank you, Mr. Chairman.

And thank you, all the witnesses, for being here. I’m sorry I’ve

been in and out—have a number of other things going on today,

but this is a very important hearing.

Mr. Giovanni, I understand that when you were there and when

you left—I want to make sure that I’ve got this straight. Until

March 31 there was an insurance policy covering the jockeys for

any kind of on-track accident; is that correct?

Mr. GIOVANNI. Yes, sir, for $1 million.

Mr. STUPAK. Correct. And then you were ousted before the expiration of that policy?

Mr. GIOVANNI. It went into effect on April 1, 2001, and I was

ousted on June 15, 2001.

Mr. STUPAK. And that basically was a 2-year policy?

Mr. GIOVANNI. It was a 1-year policy.

Mr. WHITFIELD. Okay. So it went to March 31, 2001?

Mr. GIOVANNI. 2001 to 2002. I’m sorry, to March 31, 2002.

Mr. STUPAK. Got it.

Let me ask, Mr. McCarron, were you aware that the policy expired on March 31, 2002?

Mr. MCCARRON. No, sir, I was not aware of that.

Mr. STUPAK. How about you, Mr. Colton?

Mr. COLTON. No, sir, I was not aware of that.

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Mr. STUPAK. How about you, Ms. Swan, were you aware that the

policy would expire on March 31, 2002?

Ms. SWAN. I knew that our policy was going to expire. I wasn’t

sure of the date.

Mr. STUPAK. Okay. You knew it was going to expire, but you

didn’t know the date. Did you bring it to anyone’s attention that

this policy was due to expire sometime in 2002?

Ms. SWAN. We did discuss it at the 2001 Board meeting.

Mr. STUPAK. So it went through March 31, 2002, right?

Ms. SWAN. I’m sorry, I can’t——

Mr. STUPAK. The policy of $1 million—for $1 million for the jockeys’ on-track injuries expired March 31, 2002. In your capacity as

a member of the Board did you make any—did you tell anyone this

policy was going to expire, we have to do something with it?

Ms. SWAN. At the 2001 meeting we discussed it. We discussed

the absence of the health insurance and this catastrophic policy,

and we did know that it was going to expire.

Mr. STUPAK. Okay. You knew it was going to expire.

Ms. SWAN. On what date I’m not sure, but we did know it was

going to expire and that we were trying to do something to put

something different in place.

Mr. STUPAK. What was the direction of the Board then, if the

Board knew it was going to expire and you discussed it, what was

the direction of the Board to get replacement insurance for these

jockeys?

Ms. SWAN. We directed Dr. Gertmenian’s team to do what he

could to get it done, and also that—in my recollection, the No. 1

priority at that time was the health insurance. Everybody was

freaking that we did not have health insurance for our families.

Keep in mind that even though there was COBRA offered to us by

Mr. Giovanni, most riders could not afford to get it. Most riders

were without health insurance for themselves and their families.

Mr. STUPAK. Correct. Most people cannot afford the COBRA even

though they’re offered it.

Ms. SWAN. They couldn’t.

Mr. STUPAK. You said Dr. Gertmenian and his team, what did

you mean by Dr. Gertmenian and his team?

Ms. SWAN. I consider all the people that—he has a lot of connections, he was able to get our health insurance back for us. By his

team, I mean everybody that he uses to help get things done for

the jockeys.

Mr. STUPAK. Okay. You hired Dr. Gertmenian, and then you

hired a company called Matrix, is that correct, the Board did?

Ms. SWAN. Yes, sir.

Mr. STUPAK. Why would you hire two different entities, Dr.

Gertmenian and Matrix? What was the purpose——

Ms. SWAN. Dr. Gertmenian——

Mr. STUPAK. What was the purpose of each? What was Dr.

Gertmenian’s job and what was Matrix’s job?

Ms. SWAN. It’s pretty much the same thing as when we had Mr.

Giovanni in place. He had attorneys, staff hired, everybody hired.

We included this all in one package, the Matrix team, and we were

shown that it was equivalent to what we were currently paying.

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Mr. STUPAK. So on those insurance policies then, that you knew

were going to lapse, was it Dr. Gertmenian’s and his team’s responsibility to keep them in place or to find a successor insurance?

What was your understanding?

Ms. SWAN. We were hoping to find a successor insurance. Can

you hear me?

Mr. STUPAK. Yes, I can. You were hoping to. Did you ever find

a successor insurer?

Ms. SWAN. For the catastrophic?

Mr. STUPAK. Yes.

Ms. SWAN. No, sir.

Mr. STUPAK. Mr. Colton, is that your recollection?

Mr. COLTON. Yes, sir.

Just expanding a little bit on what Matrix’s purpose was, we

were given some extensive documentation at one time. It had several resumes. A lot of them had taught, but had a lot of their business experiences in it.

It was our understanding that it had 11 attorneys on there; everybody had more letters than what was in the alphabet. And everybody was MBAs or whatever area that we would need their expertise in; they would be brought on board, and we would be able

to—basically he would negotiate the fees between them and we

could get things done cheaper and more in unison.

Mr. STUPAK. Okay. Can you relate to us, Mr. Colton, the sequence of your discussions with Dr. Gertmenian about the on-track

policy and the insurance policy? I mean, you were all concerned

that it was going to lapse, and you had discussions. And then what

happened?

Mr. COLTON. Well, first of all, a lot of us were still riding fulltime, so there wasn’t an enormous amount of contact between us

and the office.

Mr. STUPAK. But if you are riding, you would be more sensitive

to a lapse of a policy.

Mr. COLTON. Yes. But when you are riding, it was 7 days a week,

8-10 hours a day. And that was definitely a fault of mine personally—I can’t speak on behalf of the other Board members—failure

of my fiduciary responsibility.

Mr. STUPAK. When did you realize that that had expired?

Mr. COLTON. Sometime when I actually saw a letter that Albert

Fiss had been given was, I believe, when I had started working for

the Guild.

Mr. STUPAK. When was that?

Mr. COLTON. Would have been in January 2003.

Mr. STUPAK. So you saw it in your capacity as working for the

Guild? You never saw it as a jockey?

Mr. COLTON. No, I was never notified.

Mr. STUPAK. Do you know if any the jockeys ever received notice

of expiration?

Mr. COLTON. To my knowledge, no written was ever—no knowledge that I know of.

Mr. STUPAK. Mr. Bailey, could you explain a little bit about the

sequence of your discussions with Dr. Gertmenian about the ontrack insurance policy?

Mr. BAILEY. Yes.

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In May—actually, it was June; it was right around the Belmont

Stakes of 2002. The Guild management team traditionally comes to

town, whatever major race is running, and it was the Belmont

Stakes that week and they were in town for more than 1 day.

And it had come to my attention that week that there was a

rider in Louisiana who had been injured, had gone over the

$100,000 mark and was on the hook for the bills himself. And I

thought that very strange; in fact, I didn’t think it could be true

because I was sure that we still had an on-track accident insurance

in place.

So as soon as I saw Dr. Gertmenian, I asked him about it, and

he said, Of course, it’s in place. So I thought about it that night

and I asked him the next day in a way that suggested that I had

made a phone call and knew differently; and he said, No, no, no,

you’re right, I checked on it, and it’s not in place. He said, John

Giovanni canceled it.

Well, I came to find out much later that John Giovanni couldn’t

have canceled it because he wasn’t even in power for the Guild at

that time.

He also told me, he said, after he told me that Giovanni had canceled it, he was working on getting it restored. Those were his

words; he said, ‘‘We’re working on it.’’

Mr. STUPAK. Does anyone on this panel—I know some of you are

jockeys, some of you are not. Were any of you ever given notice of

the expiration of this on-track insurance policy?

Mr. BAILEY. I wasn’t. And I was at a higher level than most

when this regime took over, and I wasn’t notified, either officially

or unofficially.

Mr. STUPAK. Anyone else care to comment?

Mr. Shepherd.

Mr. SHEPHERD. At the time it was about to come to a close—it

would have been in March—we knew.

Mr. STUPAK. March of 2002?

Mr. SHEPHERD. I was aware of what it was because I had been

a senator for just a few months, I really wasn’t in a position where

I should have known anything other than ask a lot of questions.

But the first person to tell me that it was going to expire, and

that it was not a good policy, and that we would be much better

served by spending the money—the money would be much better

spent if we got health insurance for our families as opposed to getting the catastrophic on-track insurance was Robert Colton in a

phone call. And that was the first official person that mentioned we

were gonna lose it.

I mean, but I knew it. And that was all the talk of the assembly

when we was in Austin was everybody was saying, We’ve got this

policy. But everybody—the ones that were interested enough to

show up at the assembly, everybody—I never heard a single person

make a single stand or a single argument for keeping the on-track

accident. We all knew that we were taking a risk——

Mr. STUPAK. When was the assembly?

Mr. SHEPHERD. In 2001, in December.

Mr. STUPAK. And your policy was still in effect until——

Mr. SHEPHERD. Well, we lost our health insurance the end of

March, so this had been put in place in the first part of April, it

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was a 1-year policy. So when we lost our health insurance, we were

going to lose—the catastrophic insurance was going to be due in 1

year.

Mr. STUPAK. I’m sure you and others expected your Board to

keep the policy alive.

Mr. SHEPHERD. Well, you had a choice to make. You had X

amount of dollars. We’re here to talk about all the money that was

available in the Guild, but when you go back and look at the books,

a lot of the money that they’re claiming were assets were accounts

receivable, as in the money that was owed by Mountaineer Park,

about a half of $1 million at that point in time for our media rights

that we never received. So you’ve got to compare apples to apples.

Mr. STUPAK. I heard Mr. Giovanni say, on behalf of the earlier

questions from the chairman here, that there was about $2.2 million from the TV and then $2.2 million from cash from the jockeys,

so I would not call that accounts receivable. It sounds like about

$4 million a year was going into this Guild.

Mr. SHEPHERD. How much money was billed out to each one of

these tracks? And then how there is a bunch of tracks that don’t

pay that money. Check the amount of money that Mountaineer has

ever paid to the Jockeys’ Guild is zero.

Mr. STUPAK. Mr. Giovanni, you look like you want to expand on

that point.

Mr. GIOVANNI. That’s correct, there are some racetracks that do

not pay. Mountaineer Park was one of them. But the figure of $2.2

million is actual cash that came into the Jockeys’ Guild from the

racing associations that did pay.

We also used the fact that Mountaineer Park did not pay the

media rights fees to go and lobby before the legislature in West

Virginia and got $250,000 earmarked specifically for the jockeys,

for health and welfare, none of which was ever collected when I

left.

Mr. STUPAK. My time is up, but the point being that you all

knew this thing was going to expire, and from what I’m taking

from this panel and the testimony that’s been given today, no one

really knew it was expired. Assumptions were sort of made, and I

guess when we assume, that’s when problems occur.

Mr. WHITFIELD. Thank you, Mr. Stupak.

At this time, I recognize the chairman of the full committee, Mr.

Barton of Texas.

Chairman BARTON. Thank you, Mr. Chairman. I want to say at

the outset that I appreciate what you’re doing and what Congressman Stupak is doing on the minority side to bring this before the

Congress and the American people. It’s a travesty that we even

have to have this hearing.

I’m not as familiar with particulars as those two gentlemen. I

chair the full committee, and I’ve been working on energy policy

and health care policy and telecommunications policy, but I have

followed it and I have been briefed. But just for the record, I’m

going to ask a few basic questions to help me and maybe help anybody who is watching this on television. And I’m going to ask these

questions to Mr. Giovanni because you were the former manager.

My first question is, what is your current occupation, if any?

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Mr. GIOVANNI. Right now I work for an agency in Cocoa Beach,

Florida. I sell life insurance, health insurance, Blue Cross and Blue

Shield of Florida.

Chairman BARTON. So you’re not directly associated with the racing industry at this point in time.

Mr. GIOVANNI. No, sir, I’m not. When I was ousted, I sort of left

under a cloud, and it made it very difficult for me to find any type

of employment in the industry.

Chairman BARTON. I’m not casting aspersions——

Mr. GIOVANNI. No, sir. You asked me, I’m telling you what it is.

Chairman BARTON. What entity, if any, gives the Jockeys’ Guild

its authority to collect fees and to provide insurance and other benefits for the jockeys? Who empowers them?

Is there national thoroughbred racing association that has a collective bargaining agreement, or do they certify State by State?

What gives that entity the legal authority to do what they do?

Mr. GIOVANNI. That’s a good question. We are not a union, we

are a social welfare organization, and recently—well, several years

ago the IRS awarded us 505 status. We are a labor organization,

but we’re not a union.

We negotiated on behalf of our members with the different organizations involved with racing. We met with the TRA every year

or 2 years and negotiated a contract with the TRA. We traded—

when a jockey would join the Jockeys’ Guild, he would sign over

his media rights to the Guild. We would, in turn, trade them to the

racing associations so they could simulcast, whatever, and we

would receive dollars in return for that.

As far as safety standards and all are concerned, we had to deal

with 38 different States and 38 different racing commissions. My

first step in doing anything like that would have been to first approach Racing Commissions International, which is an association

of the different racing commissions around the country—in fact,

the world—get them to adopt something, and then have to go State

by State to get the States to adopt it.

Chairman BARTON. Of course, I’m 56 years old and I’m 6 feet tall

and I weigh over 250 pounds so there is no way I could ever be

a jockey. But let’s assume I was 5’2’’ and weighed 100 pounds and

was 18 years old and born on a ranch and it is just as natural as

breathing for me to ride a horse, and so I want to be a jockey.

Do I have to join the Guild to get to be a jockey?

Mr. GIOVANNI. No, sir. You have to be licensed. And the

process——

Chairman BARTON. Does the Guild do that licensing?

Mr. GIOVANNI. No, sir, that’s done by the State Racing Commission. Every State has their own commission; they are appointed by

the Governor.

Chairman BARTON. So the State Racing Commission licenses me

to be a jockey.

I then realize that I can’t afford any benefits on my own, so if

I’m willing to join—what do I have to do to join the Jockeys’ Guild?

Mr. GIOVANNI. You have to be licensed. And to maintain

licenseship you have to ride 100 horses a year, unless you’re injured, and then that’s forgiven.

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If you fail to ride 100 a year for 2 consecutive years—when I ran

it, I don’t know what the situation is now. I don’t know what they

have to do to maintain membership now, but they had to be licensed, in good standing——

Chairman BARTON. I’ve got that. But now let’s assume I do all

that and I want to be a member of the Jockeys’ Guild, I assume

I have to pay some money to do that?

Mr. GIOVANNI. Yes, sir.

Chairman BARTON. And when I come to you or the track representative or the—however you’re organized, the Guild is organized, they say, Mr. Barton, let’s see your license to ride in Texas.

And I show them that.

And let’s see the record, and I show them that.

And let’s see your checkbook, and I show them that.

And let’s make sure your check is good, so you call and it’s good.

What do you tell me I get for paying that? Am I told that I’ve

got a catastrophic insurance policy if I join the Guild?

Mr. GIOVANNI. I don’t know what it is now, but when I was

there, yes.

Chairman BARTON. So when you were there, you were told that?

Mr. GIOVANNI. Yes.

Chairman BARTON. Now, the Guild gets its dues and its standing

because jockeys that are licensed collectively decide they need a

representational body and they join. They think they’re going to get

some benefits, one of which historically has been a catastrophic

health benefit.

In turn, the Guild goes to the various State racing associations

and different tracks and says, We are the Jockeys’ Guild, we represent all these jockeys; we want you to sign some sort of an agreement with us. Is that correct?

Mr. GIOVANNI. Yes, sir.

Chairman BARTON. And part of that agreement has been, historically, if you pay us this money and you pay us these media fees,

we will provide a catastrophic health insurance policy; is that correct?

Mr. GIOVANNI. Well, the money is earmarked specifically for

health insurance which is contained in the clause that would cover

them on track.

Chairman BARTON. So I now kind of understand the basic

premise.

Now, what happened is in the murky past, either while you were

still the national manager or right after, the money that was going

to provide the premiums for the catastrophic health insurance

stopped being paid; is that a fact?

I mean, have we——

Mr. GIOVANNI. We received an increase in premium when it came

time to renew of 43 percent; we received a premium increase the

year before for 23 percent; and I think it was 17 or 18 percent the

year before that. So in the last 3 years previous to the 2001 renewal we had about an 80 percent increase in premium, and that

was because of all of the claims and some of the injuries that went

over $100,000 dollars.

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Chairman BARTON. So while you were still the national manager,

it was your understanding and your direction that the policy remain in effect; is that correct?

Mr. GIOVANNI. Yes.

Chairman BARTON. Okay. But you left under bad circumstances?

Mr. GIOVANNI. Yes, sir.

Chairman BARTON. Okay. And this new management team

that—Dr. Gertmenian came in, and while it’s in dispute, they apparently let that policy lapse; is that correct?

Mr. GIOVANNI. Yes, sir.

Chairman BARTON. But the jockeys didn’t know that?

Mr. GIOVANNI. That’s correct.

Chairman BARTON. So we have a situation now that there is no

catastrophic health insurance policy; is that correct?

Mr. GIOVANNI. Yes.

Chairman BARTON. And when we get the next panel, we’re going

to find out what they say about that.

Mr. WHITFIELD. Mr. Chairman, we do have three members of the

Board of Directors that were serving on the Board at the time the

decision was made to allow the policy to lapse or not renew it; and

all three of them said that they did not recollect any specifically

called meeting to discuss that, nor did any one of the three of them

vote on it.

Chairman BARTON. Okay. All right.

Well, my last question—and again, I’m only going to Mr.

Giovanni because he’s no longer associated and so he can, to some

extent, be a neutral observer here—is it—in your opinion, if we

have a jockey, and we’ve got several that have been injured, do you

feel like if they’ve got a bona fide case, as long as they can prove

that they were dues-paying members, that the Jockeys’ Guild

should reimburse them and should provide them health insurance

and disability insurance?

Mr. GIOVANNI. Yes, sir.

Chairman BARTON. Mr. Chairman, with that, I’m going to reserve the balance of my questions for the next panel.

Mr. WHITFIELD. Thank you, Mr. Chairman.

I recognize the gentleman from Oregon, Mr. Walden.

Mr. WALDEN. Thank you very much. And I apologize, Mr. Chairman; I had to take another brief meeting but I was trying to listen

with one ear to these proceedings.

Mr. Shepherd, I believe in your testimony you indicated that

when you—when Mr. Giovanni was relieved of command, that basically your organization was near bankruptcy, I think was your

term—‘‘nearly bankrupt,’’ I think you said.

Mr. SHEPHERD. The end of last year we were in Vegas at the assembly, that was all the talk, we are losing money, we are losing

money in racing. And when you look at the financials, a lot of the

money that we had was in the accounts receivable.

Now, the amount of money that was going out and being spent

was exceeding the amount of money that was coming in. And we—

even in Vegas, when Mr. Giovanni was in there, we were told within a year and a half at this rate we would be bankrupt. Now——

156

Mr. WALDEN. Let me switch to Mr. Giovanni. I had a financial

statement here, but I’ve—oh, here it is; lost track of it—dated—I

guess it’s under tab 20 in the book.

I don’t know if you’ve got this book down there, but if you will

turn to tab 20—I believe you do—it’s RC0286. And then there is

a balance sheet, it looks like it’s the second page, actually. There

is the filings page, and then the second, which shows $190,000 in

checks and savings and another $442,000 in receivables.

Would that have been a snapshot of the Jockeys’ Guild’s position

about the time you left?

Mr. GIOVANNI. Yes, sir.

Mr. WALDEN. Would you characterize your finances as nearly

bankrupt?

Mr. GIOVANNI. No, sir.

Mr. WALDEN. How would you characterize the finances?

Mr. GIOVANNI. We were in fairly decent financial shape. I mean,

what we had done, we could no longer afford the health insurance.

We had $2 million coming in from the members, and that was cash

coming in; and we had $2.2 million coming in from the racing associations. And we were no longer paying—we couldn’t afford the

health insurance, so that was like $3.5 million, I believe, is what

the policy was.

So we had $4 million, and getting rid of $3.5 million worth of

debt. So we weren’t in bad shape financially.

Mr. WALDEN. I see. And were there financial audits conducted

every year?

Mr. GIOVANNI. We gave an audited statement to the Board of Directors every year. We sent the financials out months in—a week,

2 weeks in advance of the Board meeting so they could review it.

We gave them an audited statement from the Jockeys’ Guild,

from Guild Products, Inc., which was a for-profit corporation that

we formed. We gave them an audited financial statement from the

Disabled Jockey Fund. That statement also included, from the Disabled Jockey Fund, every dime that came in and every name of everybody who had donated the money; and it also showed where the

money went. Every disabled or permanently disabled member who

received money from it, that was noted.

Mr. WALDEN. Out of the disabled fund as well?

Mr. GIOVANNI. Yes, sir.

Mr. WALDEN. Okay. Have you ever had a chance to review the

independent auditors report that came out, I think it was November of—I want to say November 2003—that covers the years December 31, 2002 and 2001?

Did you ever have a chance—if you would turn to Tab 13, you

will, if you haven’t, and I’m aware you would have been gone by

then, but in their notes they say—let’s see, they say in the second

paragraph, ‘‘Except as discussed in the following paragraph, we

conduct our audits in accordance with the auditing standards generally accepted in the United States of America. Those standards

require that we plan and perform the audits to obtain reasonable

assurance about whether the financial statements are free of material misstatement. An audit includes examining’’—blah, blah, blah.

‘‘for the fiscal’’—the next graph, I guess—‘‘for the year end of December 31, 2001, we were unable to obtain sufficient evidential

157

matter in connection with member mount fees, assessments in revenues from tracks necessary to obtain reasonable assurance about

whether the statement of activities and net assets and cash-flows

are free of material misstatements. We, therefore, do not express

an opinion on the accompanying statements of activities and net

assets and cash-flows for the year end of December 31, 2001.’’

Now, you were only there for half of that year?

Mr. GIOVANNI. I was there for 6 months, yes, sir.

Mr. WALDEN. And when you left, do you feel like the data were

there in the same condition they had been in prior——

Mr. GIOVANNI. Yes, sir.

Mr. WALDEN. Had you ever had a statement like this on an audit

during your tenure?

Mr. GIOVANNI. No, sir.

Mr. WALDEN. And who conducted your audits?

Mr. GIOVANNI. Arthur Andersen.

Mr. WALDEN. Okay. So the Board changed auditors after you

left?

Mr. GIOVANNI. Yes.

Mr. WALDEN. Ms. Swan, were you part of the decision to change

auditors? You’re chairman of the board.

Ms. SWAN. Yes, we did.

Mr. WALDEN. You know, I spent 5 years on a community bank

Board and served on the audit Board before coming to Congress on

a committee, and so I’m interested in these sorts of issues.

What possessed the Board to change auditors, and how did you

explain this notion of the statement here to your board?

Ms. SWAN. I think a lot of things were in turmoil at the takeover.

There was trouble with the new staff getting all of the material

that was left in the office.

One thing I do want to say, if I may interject here. I’ve been

wanting to say it. Is this okay to say it right now?

Mr. WALDEN. Sure. I’ve got a few more questions, but I have limited time.

Ms. SWAN. Okay, that’s fine.

Okay, one of the things on the catastrophic policy is we were

under the understanding that it did not cover all jockeys; that’s one

thing I think Mr. Colton was trying to explain a while ago is that

riders are out riding every day, and we were expecting that it was

going to expire. But the majority of the riders were more concerned

with the everyday health care of their families; that was something

they could see face to face.

Admittedly, we live in kind of a dream world that it’s not going

to happen to us, but the health insurance problem needed to be resolved first.

Mr. WALDEN. Okay. I want to go back to this audit issue. Are you

aware of whether or not the auditor involved here was a friend of

Dr. Gertmenian’s?

Ms. SWAN. I think he was an associate. Whether that meant a

friend, too, I don’t know.

Mr. WALDEN. Would he have maybe been a college roommate?

Ms. SWAN. I wouldn’t know that, no, sir.

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Mr. WALDEN. Do you suppose you ought to find that out, maybe?

And I mean that in all seriousness. I don’t mean to be rude about

it, but there is a—did you vote on that change?

Ms. SWAN. We hired a new team to take over, and went along

with their suggestions on who they hired. We didn’t tell Mr.

Giovanni who to hire on the previous one.

Mr. WALDEN. Okay. The new team you took over included Dr.

Gertmenian, right? Is that who you’re referring to as the ‘‘new

team’’?

Ms. SWAN. Yes, sir.

Mr. WALDEN. So you’re saying he’s the one that made the decision on who to hire as an auditor?

Ms. SWAN. Yes, sir. We wouldn’t have any idea who to hire as

an auditor. We don’t have those connections, sir.

Mr. WALDEN. And he didn’t bring that to your Board for approval? He just independently hired——

Ms. SWAN. No, I believe he did ask us. But we don’t know who

to hire as an auditor. We trust the people that we put into place

to do their job.

Mr. WALDEN. As I’ve said, I’ve been on couple of community

boards, and these are decisions usually the boards vote on, and

then it’s reflected in the minutes. I’m assuming you have minutes

of your various Board meetings?

Ms. SWAN. Yes, sir. I believe we do. I don’t have them, no, but

our staff——

Mr. WALDEN. Who has them? Are they not kept?

Ms. SWAN. I would assume that our staff does.

Mr. WALDEN. Don’t you review and vote on them at every meeting?

Ms. SWAN. Yes, sir.

Mr. WALDEN. You do. So there is a minute book somewhere?

Ms. SWAN. I know we have voted on the minutes, yes, sir.

Mr. WALDEN. So every Board meeting you review the minutes of

the prior Board meeting and you vote on them, correct?

Ms. SWAN. I don’t know if it’s at every meeting, but most meetings we have, yes, sir.

Mr. WALDEN. And those minutes are available to any of your

jockeys for review, correct? Any Guild members?

Ms. SWAN. I guess so, yes, sir.

Mr. WALDEN. Are they available to this committee? Because

we’ve been trying to get those for months.

Ms. SWAN. Part of the thing is, I don’t know why Dr. Gertmenian

and his staff aren’t being asked these questions. He would know

that. I don’t know where they keep the minutes. They’re not with

me.

Mr. WALDEN. Right. I understand. But are you chairman of the

board, co-chair of the board?

Ms. SWAN. Co-chair, yes, sir.

Mr. WALDEN. Co-chair, okay. And former chairman, all right.

What about financial statements? Mr. Donahue talked about his

desire as—you were running the fund for the disabled——

Mr. DONAHUE. I was co-chairperson for the Riders Fund.

Mr. WALDEN. And did that mean you were also a Board member

of the Guild?

159

Mr. DONAHUE. No, sir.

Mr. WALDEN. But you were co-chairman of the fund?

Mr. DONAHUE. Yes.

Mr. WALDEN. And you couldn’t get financial statements?

Mr. DONAHUE. No, I couldn’t.

Mr. WALDEN. And who did you ask for those, again?

Mr. DONAHUE. Albert Fiss and Dr. Gertmenian.

Mr. WALDEN. And they refused to give you financial statements?

Mr. DONAHUE. I should not be concerned with this matter, he

said.

Mr. WALDEN. Did anybody else who was on the Board at the

time—and all of you gentlemen at one time or another were—some

of you left immediately, I understand.

Have any of you reviewed financial statements for this fund?

Mr. Shepherd? Mr. Shepherd, have you reviewed the financial

statements in this fund?

Mr. SHEPHERD. Yes. And understanding—and you’ve got to remember my point of view going in on this was, I had a broken neck

when we started discussing what we should do with the fund. And

keep in mind the majority of the payments that went to the temporary and permanently disabled riders, most of the money came

out of the general account, not necessarily the fund. The fund was

used for special needs. During——

Mr. WALDEN. I’m getting a different view from Mr. Giovanni.

Mr. SHEPHERD. During Mr. Giovanni’s tenure, the Disabled Jockey’s Fund was used for special needs.

Mr. WALDEN. We’ve been trying to get, so we fully understand

what you all are telling us, how this money was expended. Other

members, it sounds like, of your Board or people who have run this

fund are trying to get that same data and haven’t been allowed to

see that.

Are you going to share that data with us?

Mr. SHEPHERD. Yes.

Mr. WALDEN. And how do we get that and when?

Mr. SHEPHERD. You will get it.

Mr. WALDEN. Because we have subpoenaed that and we have not

been able to get it. And what we see are big numbers and big

transfers.

We have people, like Mr. Donahue, who I think have raised very

valid questions about transfers or proposed transfers of huge

amounts of money. I mean, $1 million or even $250,000 is nothing

to shake a stick at. And I’ve got to tell you, I have been in shoes

like some of you are wearing on a board; I hope your D&O insurance is paid up because I think you’re sitting on a pile of liability

here if this money has been misspent.

And I’m no attorney—- Mr. DONAHUE. Mr. Walden, may I make

a comment?

When John Giovanni was the national manager, he is correct, it

was only used for special needs. But when Gertmenian and Matrix

Capital came in, it was never voted on, but for some reason they

started dipping into the Disabled Riders Fund with the temporary

disabled riders and not reimbursing the fund back.

Mr. WALDEN. Mr. Shepard, was there a change in policy when

Dr. Gertmenian came in and it was voted on?

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Mr. SHEPHERD. It wasn’t just when he came in.

Mr. WALDEN. When did the change occur?

Mr. SHEPHERD. We had been trying to solicit contributions to

help, because the money was not going to keep up with the expenditures. The money that was coming in wasn’t matching the money

that was going out, and it had been doing that for years.

Mr. WALDEN. All right. I’m trying to follow a process here.

When did the vote occur to change how the money——

Mr. SHEPHERD. That I can’t remember exactly.

Mr. WALDEN. But it would be reflected in your minutes?

Mr. SHEPHERD. One would think so.

Mr. WALDEN. The vote never took place.

Mr. SHEPHERD. I don’t remember exactly that, but I do know that

I was the one with the broken neck when David Gillery, the rider

from Louisiana, myself and Terry Hatton had catastrophic injuries.

Mr. WALDEN. And I’m sympathetic, and I understand.

Mr. SHEPHERD. But we needed to get the money coming in, and

it just kept going out. And the only way we could do it——

Mr. WALDEN. I’m going to have to cut you off because I’m out of

my time, and the chairman is being generous.

Mr. Colton, were you on the Board when this change was made?

Mr. COLTON. Yes, sir.

Mr. WALDEN. And was there a vote?

Mr. COLTON. No, sir.

Mr. WALDEN. Mr. McCarron, were you on the Board when this

change was made?

Mr. MCCARRON. Yes, sir, I was.

Mr. WALDEN. And was there a vote?

Mr. MCCARRON. No, sir, not to my recollection.

Mr. WALDEN. Were either of you aware of the transfer of the

money or the proposed transfer of money or Mr. Donahue’s concern

about not knowing how the money was being transferred or where

it was going?

Mr. Colton.

Mr. COLTON. Yes, Congressman, if I could comment on that.

I know a lot of you have got a lot of sore necks from shaking your

head in disbelief, and I won’t use a word like ‘‘cult,’’ but we were

trying to focus on the big picture and a lot of the decisions were

obviously not made by the board.

But concerning that, my understanding was that the majority or

all of the money inside the Disabled Jockey’s Fund was to be transferred into the Endowment. That’s when I was on the board.

Mr. WALDEN. Into the Endowment.

Mr. COLTON. Into the Disabled Jockey’s Endowment. And that he

was going to go and state to the public that the Disabled Jockey’s

Fund was going bankrupt and try and solicit donations into the

Endowment.

Mr. WALDEN. Interesting process.

Yes, sir, Mr. King.

Mr. KING. That million dollars wasn’t removed until 2002 at the

time I was a chairman—I mean, treasurer—and received a call

from Dr. Gertmenian about getting my approval for this million

dollars. And that was my pursuit.

Mr. WALDEN. I read your testimony on this.

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Mr. KING. I was trying to find out where this money had gone

or where it was spent.

Mr. WALDEN. You have never been able to find out?

Mr. KING. No. I was given partial information on the account,

but like I said, it was only partial. And you cannot make heads or

tails of what these financial statements were telling me, other than

some riders were being paid from Delaware and California from

this fund, when they actually had their own funds those payments

should have been paid from.

Mr. WALDEN. I want to ask one more question—and the chairman is being most generous—and that is this: Do your by-laws

allow you as the treasurer to authorize that kind of change of funds

without Board approval?

Mr. KING. I have to plead ignorance, because I really can’t

say——

Mr. WALDEN. Does anyone know that’s on the board, or been on

the board, or Mr. Giovanni, do any of you know, would your bylaws allow a phone call from the president to the treasurer to say,

I want to move a million bucks over here?

Mr. Giovanni.

Mr. GIOVANNI. Not when I was there, sir, no. Anything that was

moved out of the Disabled Jockey Fund was done by three letters.

First of all, if somebody called and they had asked for some assistance, whatever it may have been, I contacted Mr. Bailey, Mr. Gary

Stevens, Mr. Day and explained what the request was. If they approved it, I called the custodian for the fund and——

Mr. WALDEN. Then these three men were all Board members,

right? So it was like a small committee? Did you have like a subcommittee of the board, then, that would approve——

Mr. GIOVANNI. Yes, sir. And these were the members on the subcommittee; they would approve all allocations.

Mr. WALDEN. Thank you.

Mr. GIOVANNI. There were three letters documenting every request.

Mr. WHITFIELD. Mr. Burgess, you are recognized.

Mr. BURGESS. Thank you.

What can I say? Well, let me start with Mr. Bailey.

In your testimony, you’ve got the notation that you hired, or were

interviewing, Dr. Gertmenian, but the references were confidential?

Mr. BAILEY. Yes, sir.

Mr. BURGESS. I have never encountered a situation like that.

Mr. BAILEY. Neither had I. And not to demean, I wasn’t just an

ordinary Guild member; I was on the executive board, so I thought

my questions were well within my rights, and I thought I was due

an answer. I thought I had the obligation to go back to the membership and to give this guy, Dr. Gertmenian, a yea or a nay vote,

thus my reason for asking him.

There was no middle ground. It was, no, they’re confidential. And

I asked him a second time and he said the same thing, no, you’re

not getting them; they’re confidential.

Mr. BURGESS. Did anyone who was on the Board then, at that

time, ever get to see the references on the resume that were labeled as confidential to Mr. Bailey? Did anyone ask to see them

and was denied the ability to see them?

162

Who pulled the chain on making the hire? Who would have been

responsible for that, Mr. Bailey, do you know?

Mr. BAILEY. That would have been the executive Board at the

time, of which I was a member. There was a nine-panel board, as

I alluded to in my documentation there.

There was a call, I believe it was June 15, 16—I’d have to refer

to it, but it was a conference call for the Board members. And there

was a lot of pressure put on us that we would be—as directors and

officers, be liable if this Guild went bankrupt, and a lot of pressure

put to bear to put it mildly for us to change over and remove Mr.

Giovanni and hire Dr. Gertmenian.

And five of us, or at least at the time of the end of the phone

call, five of us said, no, we weren’t going to do it yet, we needed

more time to think about it. Pat Day, myself, Tony Black, Dean

Koontz and Larry Malonson all said we—they wanted us to fax in

our vote of ‘‘yes’’ for Dr. Gertmenian, and we refused to do it that

night.

Obviously, sometime during that night they got one of us—and

it happened to have been Mr. Dean Koontz—to sign off and vote

for Dr. Gertmenian; and thus they had a 5-4 majority. I say ‘‘they,’’

I say the board.

Mr. BURGESS. Who brought Dr. Gertmenian to your organization?

Mr. BAILEY. That would be Chris McCarron.

Mr. BURGESS. Mr. Giovanni, let me ask you, now the jockeys did

not know that the catastrophic fund had lapsed; is that correct?

Mr. GIOVANNI. That’s what I understand.

Mr. BURGESS. So they couldn’t be faulted if they were still making payments?

Mr. GIOVANNI. No.

Mr. BURGESS. Did they still make payments?

Mr. GIOVANNI. I don’t know. I was out.

Mr. BURGESS. You were out at that point.

Does anyone know the answer to that question? Were the jockeys

still making payments after the catastrophic insurance was canceled?

Mr. KING. Yes. All members had to make—their mount piece had

to be paid and their dues had to be paid, which was $100 a year.

Mr. BURGESS. And where would this money then go if there is

no insurance?

Mr. KING. Most of the time it went to—at first, when I first went

in there, it was going to the operating account.

Mr. BURGESS. The money that was supposed to go to the catastrophic insurance?

Mr. KING. Well, I’m not sure where they had earmarked it for,

but it was actually going into the operating account.

Mr. BURGESS. Well, the young man who was injured, who testified first, said that he thought he was buying a catastrophic insurance policy. He writes a check for $100 a year and $10 for every

ride.

Where did that money go if there is no policy there to receive the

money.

163

Mr. KING. Well, that goes for, basically, pay management, pay

the people that are working for us in whatever services outside

that we have.

Mr. BURGESS. Within the Guild itself?

Mr. KING. Yes.

Mr. BURGESS. Within the Guild itself.

Mr. DONAHUE. Yes.

Mr. BURGESS. Okay. Well, now part of the catastrophic insurance—or maybe it was the health insurance—maybe I have it confused because I am easily confused, and this is a terribly complex

story. This question I guess I would ask to Mr. Colton. The media

rights purchased part of the insurance policy. Do I have that correct?

Mr. COLTON. Until I started working for the Guild I had a little

bit of knowledge through John’s education and I did go down to

Kentucky with Mike McCarthy and review the financials for just

a self-education. But when I started to work for Gertmenian everything was just going in one account and things were just getting

paid out of there. Nothing was earmarked for any specific expense.

Mr. BURGESS. As of today, is there a catastrophic fund for a jockey who is injured this afternoon in a race? I don’t even know if it’s

racing season, but if a jockey is injured this weekend, is there a

catastrophic fund available for him?

Mr. COLTON. To my knowledge, there is not. I have not been a

member since I’ve been expelled.

Mr. BURGESS. If a jockey’s family member become ill tonight and

needs regular insurance, is that insurance available to their family

member?

Mr. COLTON. Correct.

Mr. DONAHUE. If they’ve purchased the policy.

Mr. COLTON. Not every member who joins the Guild is in the

health insurance policy. There are amounts for that a year and

then an elective benefit you have to pay a monthly premium for.

So it has nothing to do with the on-track policy we’ve been discussing.

Mr. BURGESS. Well, who owns the media rights today?

Mr. SHEPHERD. Jockeys’ Guild.

Mr. BURGESS. How much are the media rights worth today?

What are they paying out?

Mr. SHEPHERD. What are they worth or what are they paying

out?

Mr. BURGESS. What is the dollar amount that is associated with

the media rights? Presumably, there’s some transfer of money for

the media rights from one party to another. How much is that?

Mr. SHEPHERD. Last year, they billed out $1.5 million and received $1.25, I think. Paid out about almost $1.3—a little bit less

than $1.3 million in temporary and permanent member——

Mr. WHITFIELD. Excuse me, Dr. Burgess, if you wouldn’t mind.

You’re saying that tracks for the media rights today are paying

about $1.2, $1.3 million?

Mr. SHEPHERD. Yes, sir.

Mr. WHITFIELD. I think Mr. Giovanni said back in 2001 they were paying $2.2, $2.3 million, right?

Mr. GIOVANNI. $2.2 million.

164

Mr. WHITFIELD. So a $1 million reduction. How did that come

about?

Mr. SHEPHERD. I didn’t see that kind of money coming in, and

I wasn’t really paying that much attention in years before. But I

was an interested member, and I don’t remember what was coming

in, but don’t seem like it was that much. Otherwise, we should

have been able to keep up with our health insurance.

Mr. WHITFIELD. But you’re chairman of the Board now.

Mr. SHEPHERD. At this point in time. What I’ve seen the financials and when I looked.

Mr. WHITFIELD. $1.2 million coming in.

Mr. SHEPHERD. $1.25 or something like that that came in last

year.

Mr. WHITFIELD. Thank you, Doctor.

Mr. BURGESS. You’re reclaiming my time.

Mr. McCarron, perhaps I should ask you, what has happened to

the money, the money that was being paid in either by jockeys or

by media rights that was supposed to be paying for catastrophic

coverage. What happened to that money? Where did it go?

Mr. MCCARRON. I have no idea, sir.

Mr. BURGESS. Does anyone have an opinion?

Mr. MCCARRON. I have not been involved with the Jockeys’ Guild

since I retired June 23, 2002.

Mr. BURGESS. Does anyone have at least a notion of where that

money is, where it has been going?

Ms. SWAN. This is Tomey Swan. Can you hear me?

I understand that when jockeys pay their per mount fee, it is not

paid to their catastrophic insurance. We understood that our catastrophic was going to expire, and it did. When we pay in per

mounts, it covers a lot of things—covers the staff, helps supplement

our health insurance. It just covers a lot of things. It’s not particularly for catastrophic insurance. It never was.

Mr. SHEPHERD. The contracts that I’ve ever read don’t say——

Mr. BURGESS. If I may, Mr. Birzer, who testified earlier, gave us

the impression that it was his understanding that he had purchased that insurance—in fact, he made a rather plaintive statement that he would not have left his family exposed in that way.

His intention all along was to be paying that money. So he didn’t

make that information up, I don’t believe. Where would he have

gotten the notion that that money was going to pay for his catastrophic insurance?

Mr. SHEPHERD. I said that I understood for all the time since

1975 that the racetracks were paying for our catastrophic insurance and it wasn’t until 2001 when I found out more about the accident in 2000 of Stacey Birden that I realized how everything over

a hundred thousand was being paid for. The racetracks were only

paying for the first hundred thousand. But we were always led to

believe that the racetracks were paying for that—and, by rights,

should.

Mr. BURGESS. Is that an opinion shared by anyone else?

Mr. BAILEY. It’s kind of difficult to understand even though

you’re going through it. Traditionally, our health insurance as well

covered our catastrophic. Everything over a hundred thousand, our

health insurance picked up. When the health insurance was

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stopped, obviously, we had no health or catastrophic. So when Dr.

Gertmenian reinstituted the health insurance, it’s obvious that

health insurance policy did not pick up the catastrophic end. Therefore, the need for a separate policy, which he did not—and if a

member didn’t know that, he would have thought, oh, I’ve got my

health insurance back. I must have my catastrophic back. So it was

incumbent upon the new board, especially Dr. Gertmenian, to tell

the members the insurance wasn’t the same.

Mr. BURGESS. Thank you for that clarification.

Mr. Shepherd, let me just ask you then to wrap up. The Chairman has been kind with my time, even though he took some of it

for his own use; and I appreciate the indulgence. Very complicated

situation that we have in front of us today. Congressional hearing,

I wager that’s probably not something that you do very often. What

would you like to see accomplished as a result of all of the effort

and everything that everyone is putting forth today?

Mr. SHEPHERD. I think a national work comp would probably be

the most efficient way to do it, most bang for the buck. What I’d

like to see accomplished is my children not to have to go through

what we’ve gone through and be abused by the industry, by the

racetracks, that they would get treated fairly as athletes, not have

to pick up the crumbs like we’ve had to—and we literally have had

to.

Mr. KING. What about the money that disappeared from the

Guild? I’d like to have that back for the jocks.

Mr. SHEPHERD. That will go to litigation there.

Mr. KING. One of the riders signed a petition requesting the

search and audit to find this money, which has led to the lawsuit

that I’ve filed against the Jockeys’ Guild, and still no answers.

Mr. BURGESS. Mr. Chairman, I’ll go on record as saying I don’t

favor the nationalization of the horse racing industry in this country. I guess we can refer to racetracks as Amtraks in the future if

we did that, but it doesn’t seem to be a particularly healthy way

to go. But I have to wonder in my mind where Federal agencies

such as OSHA were while all of this was going on. I don’t know

whether they have jurisdiction over racetracks, but it would seem

to me logical that they would. But I will just—with that observation I’ll end my testimony. Thank you for your indulgence.

Mr. WHITFIELD. Thank you.

Mrs. Blackburn, you’re recognized.

Mrs. BLACKBURN. Thank you, Mr. Chairman; and thank you all

for your time.

I’m beginning to feel like I need a chart to follow all of the different story lines. I think each and every one of you sitting at that

table would say this is a great example of where hindsight is 20/

20; and if you had the opportunity to go back and do it over, you

would probably do it just a little bit differently.

Mr. King, if I may start with you, please. Did the Guild ever use

a CPA or an outside firm to manage their accounts?

Mr. KING. No, ma’am.

Mrs. BLACKBURN. So you never had outside management of those

funds.

Mr. KING. Unless you would call Matrix outside management.

Mrs. BLACKBURN. Did you ever have anyone do an annual audit?

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Mr. KING. The annual audit was always done through Dr.

Gertmenian, Lacey, Marlette & Donnelly.

Mrs. BLACKBURN. So he audited himself.

Mr. KING. It was an auditing firm, Lacey, Marlette & Donnelly.

Mrs. BLACKBURN. Mr. Giovanni, do you have a response to that,

sir?

Mr. GIOVANNI. When I was national manager we did an audit

every year.

Mrs. BLACKBURN. Sir, who performed your audit?

Mr. GIOVANNI. Arthur Andersen.

Mrs. BLACKBURN. And you could produce those audits.

Mr. GIOVANNI. No, ma’am, I could not. I was locked out in June

2001, and I do not have any—I had to negotiate to get my personal

property back out of the offices. I was never allowed to set foot

back in the office.

Mrs. BLACKBURN. They should be—those audits should be a part

of the Guild records.

Mr. GIOVANNI. They should be part of the Guild record, yes,

ma’am.

Mrs. BLACKBURN. All right. Mr. Giovanni, I think I want to stay

with you for a second. I’m having a little trouble following what

we’re saying on both insurance policies. If my notes are right, you

all have said that having the catastrophic and the health insurance

would have come to the $4.3 million and that could not be afforded.

Mr. GIOVANNI. No, ma’am.

Mrs. BLACKBURN. No. All right.

Mr. GIOVANNI. There was actually only one policy. It was a

health insurance policy that covered the jockeys when they were

injured on track. If their expenses went beyond the hundred thousand which was provided by the racing associations, the health insurance would come in and pick up the difference. When we could

no longer afford the health insurance, with the 43 percent increase,

and could no longer afford it, we decided to buy—the executive

committee opted to buy a catastrophic policy that covered the jockeys when they got hurt on track for up to a million dollars.

Mrs. BLACKBURN. Okay. All right. That has been confusing, and

I’m sure it’s confusing to you all as we try to follow what has happened with these policies.

Let me ask you something else, Mr. Giovanni. I think that Dr. Gertmenian’s salary is $167,000 a year. Is that correct?

Mr. GIOVANNI. I heard that. I really don’t know.

Mrs. BLACKBURN. Any of you—let’s see, Mr. Shepherd, you’re

chairman of the board. Can you confirm that?

Mr. SHEPHERD. $165,000 is what I think it is.

Mrs. BLACKBURN. $165,000. Okay. And, Mr. Giovanni, when you

were there, what was your salary?

Mr. GIOVANNI. $140,000.

Mrs. BLACKBURN. $140,000. Okay. Okay. Mr. Giovanni, who were

the Board members when you were removed from your position?

Mr. GIOVANNI. Excuse me?

Mrs. BLACKBURN. Who were the Board members?

Mr. GIOVANNI. Who were the Board members?

Mrs. BLACKBURN. Yes.

Mr. GIOVANNI. There were 27 of them.

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Mrs. BLACKBURN. Twenty-seven Board members.

Mr. GIOVANNI. There was an executive committee of nine that

acted in the interim between Board meetings.

Mrs. BLACKBURN. All right. Mr. Colton, you said that the assembly at the 2000 national convention passed a resolution to make

the Guild a for-profit entity.

Mr. COLTON. I won’t use the word ‘‘for profit,’’ just that we were

no longer going to be allowed to run at an operating loss. We could

not go into our assets anymore, if that’s correct. That day, Mr.

Giovanni, Jerry Bailey and Chris McCarthy were there. That’s my

recollection. It was basically the executive Board to balance our

personal budget.

Mrs. BLACKBURN. All right. At this point in time, right now, Mr.

Shepherd, are you running at a profit or a loss?

Mr. SHEPHERD. A loss.

Mrs. BLACKBURN. At a loss. How much?

Mr. SHEPHERD. I haven’t seen the financials. Our treasurer keeps

close watch on that; and he’s a jockey that also has two college degrees, one in business and one in finance. He keeps close tabs with

the financial—chief financial officer of the Guild. And then I talk

to Jeff all the time about it, and he said we’re pretty much where

we had been but the money—there’s a lot of racetracks that have

quit paying us this past year and so—I’m sure we’re running at a

loss.

Mrs. BLACKBURN. I want to be sure then that I’m following this.

You were running at a loss, and so the board—the Guild gets rid

of Mr. Giovanni. And we decide to become a for-profit—we’re going

to focus on profit. We’re going to change our structure here. So our media rights were at $2.2 million and now $1.2 million,

and we no longer have the health and catastrophic insurance, and

we are running at a loss. And back in 2002 we moved a million dollars from the Disabled Jockeys’ Fund, and we still don’t know what

happened to that money, and all of our annual dues and our mount

fees are going into an operating account, and today there is no fund

for a jockey if he were to be injured today. Am I correct?

Hold on a minute. Mr. Giovanni, you’re shaking your head. Go

ahead, sir.

Mr. GIOVANNI. That’s what I understand. That’s what I understand, yes.

Mrs. BLACKBURN. Okay.

Mr. GIOVANNI. I’m no longer associated with the Jockeys’ Guild.

Mrs. BLACKBURN. Yes, sir. And I appreciate that. Let’s see, and

is it——

Mr. DONAHUE. I’d like to make one comment to the salaries they

were receiving. When John was national manager of the Guild, he

wasn’t paying his own company $40,000 a month for consulting. Although he had lobbyists, he was not paying his company that

$40,000 a month.

Mrs. BLACKBURN. So Dr. Gertmenian gets $165,000 a year, plus $40,000 a month goes to Matrix, his company, as a consulting fee.

Mr. SHEPHERD. There’s also—ma’am, there’s not the expense of

all the attorneys. One attorney that we had before with Mr.

Giovanni, Mr. Kenney, was getting probably somewhere around a

couple hundred thousand a year. There’s a lot of——

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The bottom line—if you go look at the bottom line on the money

that was spent, the money that was spent by the Jockeys’ Guild 4

years prior to and 4 years after the change, the percent of the

money that went to members’ benefits and member welfare is a lot

higher now than——

Mrs. BLACKBURN. Mr. Shepherd, somewhere we’re missing something and I guess——

Mr. SHEPHERD. We’re not a nonprofit now.

Mrs. BLACKBURN. You say missing dollars somewhere along the

way. If my understanding is right, you have got people paying separately for health insurance, you have the dues and the fees that

are going in every year, but you don’t have a fund that would meet

the obligations that were there for individuals that were injured.

I appreciate the fact that you all are here and are willing to talk

with us and we’re going to try to work through this issue and see

if we can continue to focus on the three main issues that this hearing is to focus on: the accounting of the Guild’s finances, notification of the jockeys of the cancellation of their health insurance and

on-track insurance, and the removal of Mr. Giovanni and the replacement of Dr. Gertmenian. That is the focus of trying to work

through this.

With that, I’m going to yield back. My time is out. I thank you,

Mr. Chairman, for the time; and I thank you all for your indulgence today.

Mr. WHITFIELD. Thank you, Mrs. Blackburn.

Let me go back to Mr. McCarron for just a minute.

Mr. McCarron, how many Board members were there? We had

talked earlier about an actual Board meeting in which the policy

was allowed to lapse or the decision was made, and you were a

Board member, Mr. Colton was a Board member, Ms. Swan was a

Board member. Who else were Board members?

Mr. MCCARRON. Well, total Board members—sir, are you referring to the full Board of 27 senators or the executive?

Mr. WHITFIELD. The executive.

Mr. MCCARRON. The executive board. I believe there are nine,

and I’m afraid to say that I don’t think I could name them all at

this point.

Mr. WHITFIELD. What about you, Mr. Colton?

Mr. COLTON. I think I can come close. There was the three of us

at this meeting, Michael McCarthy, Robby Davis, Nicky Wilson,

Ray Subill, Nicky Wilson, Larry Reynolds. What number am I up

to?

Mr. WHITFIELD. You have got Chris McCarron, Mr. Colton, Ms.

Swan, McCarthy, Davis, Nicky Wilson, Larry Reynolds.

Mr. WHITFIELD. Ms. Swan, do you know who the other member

was of that executive committee?

Ms. SWAN. You didn’t mention me, did you?

Mr. WHITFIELD. Yeah, I mentioned you. McCarron, Colton,

McCarthy, Davis, Swan, Wilson and Reynolds.

Mr. MCCARRON. Mr. Chairman, I think it was Kent Desormeaux.

Mr. WHITFIELD. The three of you, however, do not recall a specific Board meeting called to discuss this issue and none of you remember voting on it. That’s correct, isn’t it?

169

Okay. Now, Mr. Colton, you worked for the Jockeys’ Guild. Do

you still work for the Jockeys’ Guild?

Mr. COLTON. No, sir.

Mr. WHITFIELD. Why did you leave?

Mr. COLTON. I left at the end of March 2003.

I had been asked—it was the first time that I really had seen

how the office worked, and if I was to say dismayed, that would

be an understatement. I really in the past had believed—and I

was—as I told you before, I didn’t want to use the word—I believe

we were moving positive, and I believed in Dr. Gertmenian, he was

a positive, and——

Mr. WHITFIELD. Did you resign or asked to leave?

Mr. COLTON. I resigned, quit, walked out of one meeting.

Mr. WHITFIELD. Mr. Donahue, you worked for the Guild.

Mr. DONAHUE. Not in his capacity, but I was the co- chairperson

for the disabled riders funds.

Mr. COLTON. I want to make one clarification. I actually had to

sue for my wages, but the wages did not come from the Guild, they

did come from Matrix.

Mr. WHITFIELD. So Matrix paid you.

Mr. COLTON. Yes, sir.

Mr. DONAHUE. Mine was unpaid.

Mr. WHITFIELD. You were chairman of the Disabled Jockeys’

Fund.

Mr. DONAHUE. Until December 2004.

Mr. WHITFIELD. What happened?

Mr. DONAHUE. I was relieved of my duties.

Mr. WHITFIELD. Why?

Mr. DONAHUE. I became very vocal about the finances, I’m sure.

When David Shepherd took over, they formed a new committee,

but a month prior to——

Mr. WHITFIELD. There’s been so much testimony today, but were

you the one testifying about the $1 million request being made to

transfer that money?

Mr. DONAHUE. Eddie King.

Mr. WHITFIELD. Did you work for the Guild?

Mr. KING. That was an unpaid position by our peers.

Mr. WHITFIELD. What was your position?

Mr. KING. Director of the Guild from 2002.

Mr. WHITFIELD. So how many different accounts were there at

the Guild?

Mr. KING. At one time, I saw six.

Mr. WHITFIELD. You had the Disabled Jockeys’ Fund.

Mr. KING. That was the one that I focused on. But I also asked

for their operating account, the expenses around all financial transactions from that. Basically, every account that they had, I asked

for the financials.

Mr. WHITFIELD. And you were responsible for the Disabled Jockeys’ Fund?

Mr. KING. Well, when I gave my approval to remove $1 million,

yes, sir.

Mr. WHITFIELD. Who asked you to move the million dollars?

Mr. KING. Dr. Gertmenian.

Mr. WHITFIELD. Was that done?

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Mr. KING. The main reason it was removed, it was removed before I received the call, some $300,000 was removed in December.

Mr. WHITFIELD. Okay. Now let me go back to Mr. Bailey and Mr.

Day and Mr. Colton and Mr. McCarron. All of you were still active

jockeys in April 2002, is that correct?

Mr. DONAHUE. That’s correct.

Mr. WHITFIELD. All were members of the Jockeys’ Guild in 2002,

correct?

Mr. BAILEY. Correct.

Mr. COLTON. 2002 I was. I don’t believe Pat Day was. I believe

he had already resigned.

Mr. WHITFIELD. Mr. Day.

Mr. DAY. What was the question? I’m sorry.

Mr. WHITFIELD. You were still actively riding in April 2002,

weren’t you?

Mr. DAY. I was still actively riding, but I was no longer a member of the Guild. I resigned the middle of June 2001.

Mr. WHITFIELD. Okay. But, Mr. Bailey and Mr. Colton and Mr.

McCarron, you were all acting members of the Guild. And I just

want to bring this home once again. You three, none of you were

aware that the policy had lapsed for the on-track catastrophic coverage, is that correct?

Mr. BAILEY. I wasn’t aware of it until I approached Dr.

Gertmenian.

Mr. WHITFIELD. You had not received any notice, formal notice

from the Guild, had you, Mr. Colton?

Mr. COLTON. No.

Mr. WHITFIELD. Mr. McCarron, you had not.

Mr. MCCARRON. That’s correct, sir.

Mr. WHITFIELD. Mr. Shepherd, you’re currently the chairman of

the Board of Directors.

Mr. SHEPHERD. Yes, sir.

Mr. WHITFIELD. Gary Birzer is a personal friend of yours.

Mr. SHEPHERD. Yes, sir.

Mr. WHITFIELD. You have known him for a long time. I suppose

any jockey—almost any jockey is going to have some injuries. I

guess that’s part of the trade.

Mr. SHEPHERD. Yes, sir.

Mr. WHITFIELD. Gary Birzer testified that he did not know that

the policy was not available anymore, that it had lapsed. And you,

as chairman of the board, when did you first become aware that

the policy was going to lapse?

Mr. SHEPHERD. At that point in time I wasn’t even on the board.

But, like I stated, Robert Colton who said that he wasn’t aware of

it, he was the one that informed me of it, that it was going to lapse

and that we shouldn’t do it. We shouldn’t renew it.

Mr. WHITFIELD. How long have you been chairman of the board?

Mr. SHEPHERD. Since December.

Mr. WHITFIELD. December of?

Mr. SHEPHERD. This past year, 2004.

Mr. WHITFIELD. And how often does the Board meet?

Mr. SHEPHERD. We’ve had four meetings so far this year, teleconference meetings.

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Mr. WHITFIELD. You made a comment awhile ago to Mrs.

Blackburn or maybe Mr. Burgess that—I understand we all have

different educational levels and so forth, but, as chairman of the

board, you do have a responsibility to look at financial statements

and so forth, but you made the comment that you really don’t focus

on that because there is someone else that’s more qualified to do

that. And who is that?

Mr. SHEPHERD. Jeff Johnston is the treasurer, and we go over

them. I talk to him real regular, and we go over them and discuss

and things that don’t make sense. I mean, he has the education

and is a jockey. So I trust him a lot.

Mr. WHITFIELD. Now, as chairman of the board, do you have access to the minutes of the Board meetings?

Mr. SHEPHERD. Yes, Jeff’s been keeping them since I’ve been in.

He’s been a lot more diligent.

Mr. WHITFIELD. Would you provide the committee with minutes

of the board? Would you provide us those minutes as chairman of

the board?

Mr. SHEPHERD. I think we should.

Mr. WHITFIELD. Okay. Now we’d like to have those by next Friday.

Mr. SHEPHERD. That’s asking a lot.

Mr. WHITFIELD. As chairman of the board, do you report to Dr.

Gertmenian or he to you?

Mr. SHEPHERD. He reports to us—us as a whole.

Mr. WHITFIELD. All right.

Okay. Mr. Stupak, any additional questions?

Mr. STUPAK. Mr. Chairman, just—if I may, I would move we not

ask for documents, we subpoena them.

No. 2, I would advise the Board members, being an attorney up

here, I would suggest you get some legal counsel. Because this

thing is really a hornets’ nest and starting to unravel, and as it

unravels there’s some responsibilities you should have taken that

you did not.

Third, Mr. Chairman, I hope we would join together and I really

think we have to do workers comp on a national level for jockeys

and riders and the rest of these other people.

I think the other thing we have to do is get ahold of the National

Labor Relations Board and change the rules and allow these people

to bargain collectively with whoever they want. Allow them collective bargaining.

I think, also, we should have OSHA go through these cracks. I

think if you and I join with maybe the chairman and Mr. Dingell

and go to the Secretary of Health and Human Services and ask

that the National Institute For Occupational Safety and Health undertake a study of racetracks and related sites Nationwide——

And last but not least, we saw in the opening video clip here

many of these people riding—and I see those clips all the time. I

see them in ads for VISA and things like this. I think these individuals who are the riders are entitled to some compensation for

that, more than what they’ve been receiving.

I would hope we would explore together an opportunity to see

how we can try to make this industry whole because it certainly

hasn’t been for a long, long time.

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I look forward to our next panel, but I want to thank everybody

on this panel. We’ve learned a lot here today. Thank you.

Mr. WHITFIELD. Mr. Stupak, thank you.

I guess the U.S. Is about the only jurisdiction in the world that

has a fragmented racing industry per se. I mean, there’s British

horse racing Board in Great Britain, and we could go on with

France and whatever and whatever.

One of the purposes of this hearing, of course, is to explore everything. Because we know there’s a need. We’re not sure the best

way to get there, but, as it’s already been mentioned, after this

panel and the next panel we are going to have another hearing.

We’re going to have the racetrack people in and others from the industry and get their views and hopefully make some decision to

move forward to improve this sport and to increase the safety and

to make sure that people are not falling between the cracks. That’s

our goal here.

Now I want to ask, without any objection I’m going to submit

this entire binder, a hundred documents, for the record.

I want to thank all of you members of the panel for being with

us today.

We’re going to bring up the third panel now. Mr. Giovanni, I

don’t know if you have additional deadlines to meet or anything,

but if you would like to stay, we might have some additional questions for you as a result of this next panel, if you have the time.

Mr. GIOVANNI. Certainly, yes, sir.

Mr. WHITFIELD. Anyone else that’s interested?

Mr. DONAHUE. I have one question. You asked Gary Birzer a

question of whether he knew of any other disabled riders that

weren’t receiving benefits. Well, I can’t speak for any other disabled riders, but I can speak for myself—I had surgery in February—that my hospital bills have not been paid yet. They’ve been

paid by my private insurance but not the 20 percent that the

Guild’s responsible for. I have not been reimbursed for prescription

medicines since July. I don’t know if there’s any other disabled riders in the same position.

Mr. WHITFIELD. When were you injured?

Mr. DONAHUE. 1986.

Mr. WHITFIELD. But you have not received any assistance since

July.

Mr. DONAHUE. For my prescription medicine, no.

Mr. WHITFIELD. Well, thank you and thank you very much for

your testimony. We genuinely appreciate it.

I would at this time call the third panel. On the third panel, we

have with us Dr. L. Wayne Gertmenian, who’s the president and

chief executive officer of the Jockeys’ Guild; we have Mr. Albert

Fiss, who’s the vice president and chief operating officer; and then

we have Mr. Lloyd Ownbey, who’s the general counsel of the Jockeys’ Guild.

We welcome all three of you and thank you very much for your

patience today. As you know, it’s kind of a complicated issue and

takes a while to go through it. I want to thank all of you for being

with us today on this important hearing.

As you are aware, the committee is holding an investigative

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mony under oath, as we did the two previous panels. Do any of you

three gentlemen object to testifying under oath today?

Mr. GERTMENIAN. No.

Mr. WHITFIELD. Mr. Fiss.

Mr. FISS. No.

Mr. WHITFIELD. Mr. Ownbey.

Mr. OWNBEY. No.

Mr. WHITFIELD. The Chair advises you that, under the rules of

the House and the rules of the committee, you are entitled to be

advised by counsel. Do any of you desire to be advised by counsel

during your testimony today?

Mr. GERTMENIAN. Yes.

Mr. FISS. Yes.

Mr. WHITFIELD. You are your own counsel, Mr. Ownbey.

Mr. Fiss, who’s representing you today?

Mr. FISS. Robert Trout.

Mr. MINSK. Lawrence Mentz.

Mr. WHITFIELD. Do you two gentlemen intend to testify today? In

that case, if Dr. Gertmenian and Mr. Fiss and Mr. Ownbey would

rise, I’d like to swear you in.

[Witnesses sworn.]

Mr. WHITFIELD. Each of you are now under oath.

I would recognize Dr. Gertmenian for his 5-minute opening statement.

TESTIMONY OF L. WAYNE GERTMENIAN, PRESIDENT AND

CHIEF EXECUTIVE OFFICER, JOCKEYS’ GUILD; ALBERT FISS,

VICE PRESIDENT AND CHIEF OPERATING OFFICER, JOCKEYS’ GUILD; AND LLOYD OWNBEY, GENERAL COUNSEL,

JOCKEYS’ GUILD

Mr. GERTMENIAN. I would like to use my time, Mr. Chairman,

and thank you very much for allowing me to testify and thank all

of you and particularly investigators that came and asked questions of me, and I do appreciate the fact that you were very polite

to me.

I’d like to spend my time if you allow me to just take an issue

that has so concerned me since I was asked to come and help. It’s

a complicated subject, and so I’m going to ask you to please allow

me to sound a little confused because it is confusing. It’s called the

scale of weights. Now it’s a system, a process by which each jockey

weighs in before every race. It’s a system that, unfortunately, has

got a built-in fraud to it that is impossible to fix it seems. As every

time I try to address it I’m told by the people who are empowered

to make these decisions that it’s been this way for a hundred years

and it’s not going to change.

Now if I can explain. When you go to a track, you get a program,

and it’s going to have a weight next to the jockey. The public is led

to believe that that weight is the weight of the jockey and his gear.

It’s simply not true.

We have two clerks in New York, as you know, who are under

indictment for this because the only way for them to keep their job

was for them to go ahead and put these numbers down. They’re ordered to do it. The fact is that it’s not weighing all the equipment.

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Now most people who are in the industry when I’ve asked—and

I’ve asked many, many times—how much does the equipment

weigh, all the gear, from the withers to the rump, they’ll all tell

you it’s about six, six and a half pounds. I believed it because everybody said the same number. But when I took all of the gear and

put it into a plastic basket and weighed it, it was ten pounds. So

you start off with a four-pound fudge factor.

In addition to that, the jockeys, who are required to maintain a

weight of approximately 114 in the nude, maybe 113, can’t get

there. Maybe they could a hundred years ago in 1907 or whenever

the year was—I think that’s the last year they made adjustments—

but to get to that weight now there are just very few people born

with those kinds of bone and structure. So the result is that probably 90 percent, maybe more, of the jockeys in this country go

through extreme measures to make the weight.

Now to a certain extent they make it because they don’t count

the four extra pounds I was telling you about, but to a great extent

they make it by going to the sweat box every day, taking out 3 or

4 pounds each day when they go to work, dehydrating their bodies

and putting them into great danger. The worst of it, Mr. Congressman, the worst of it is that probably 80 percent of them, and probably much more than that, taking different tests, are below the 5

percent mandatory body fat that all athletes have to maintain.

Now in some sports that number required by their organizations

is much more, 8 percent, 12 percent. Gymnasts and cyclists, who

have the lowest number, it’s 5 percent. They’re allowed to compete.

If they don’t, they have to leave that day. They can’t compete.

In horse racing, the typical jockey is in the 4 and 3 percent

range, which means that they are permanently cannibalizing their

liver and their kidneys. And we know since, we’ve already had one

or more on a dialysis machine, that it’s a problem now that’s going

to explode. It’s going to be an enormous problem. They use drugs.

Most jockeys try not to, but they have to use Lasix or some kind

of diuretic. So they’re doing horrible things to their body so they

can keep their jobs.

We have asked—we would like your help—it’s not to raise the

scale of weights, this system that’s being used Nationwide, but

rather change the system. That is, take the 10 pounds of gear,

which is mostly there for their safety, and make it mandatory. Otherwise, what they do is they take their vests and they strip out the

sponge, they take out their different equipment and they cheat on

the equipment, take cardboard boots, everything they can to get rid

of the equipment that weighs to make their weight.

We would like to see 10 pounds of mandatory equipment on

every jockey. Instead of him being weighed with his equipment,

which—instead of making him try to cheat, we would like him to

be weighed in the nude, required to have 5 percent of body fat on

his system before he go to work any given day, and that he must

have 10 pounds of safety gear on his horse. That is what I’m asking

you.

Thank you for listening.

Mr. WHITFIELD. Mr. Fiss.

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TESTIMONY OF ALBERT FISS

Mr. FISS. Thank you, Mr. Chairman.

My name is Albert Fiss. I am vice president of the Jockeys’

Guild, the national labor organization for professional thoroughbred and quarterhorse race riders. I’m also on the Board of Directors of the New York Jockey Workers Compensation Fund for New

York jockeys and exercise riders.

I started working for the Jockeys’ Guild on Saturday, June 16,

2001. At the time, it was my understanding that I would be working as a consultant to the Guild until the end of the calendar year.

Then, on December 22, 2001, I received a phone call from the stewards at Beulah Park about a jockey, Arnold Ruiz, who had died

from an on-track injury. I had already sent the office staff home

for Christmas, so I drove to Grove City, Ohio, to meet with Arnold’s

family. It was this single event that made me realize that I had

the opportunity to potentially improve the lives of a group of athletes who were in need of help.

So on January 1, 2002, I started going to industry functions and

trade association meetings. I quickly learned that the industry as

a whole was very resistant to change, but probably more disturbing

was the lack of cooperation, lack of accountability, lack of responsibility, lack of interest on issues pertaining to jockeys by the industry leaders and their associations.

When I first returned home to Los Angeles after spending 2

months in Lexington, Kentucky, I had occasion to meet with some

of my friends. They asked me how was it going and what was the

horse racing industry like. I explained to them that horse racing

is not a single industry but rather there’s 38 separate industries.

Horse racing is driven by gambling, and gambling is a State-regulated industry. There are 38 active paramutual racing States, each

of which have their own rules and their own regulations. Imagine

dealing with 38 separate Paul Tagliabues, if you will.

Twelve months later, I was once again home for a visit and met

with some of my friends again. They asked me once again, what

is the horse racing industry like? This time I explained to them

that horse racing is not a single industry but rather there’s six separate industries. Horse racing has six stakeholders, each of which

has at least one trade association, most have two, and some have

three. The fact that there are so many stakeholders and so many

trade associations that protects these stakeholders is what festers

the lack of cooperation, accountability and responsibility which is

so pervasive in the industry. It also happens to be the environment

which the racing associations cultivate.

As an example, State racing commissions. One of the stakeholders is State racing commissions. By their administrative nature they’re unwilling or unable to assist jockeys with the problems

that have been identified. For example, the chairwoman of the Illinois racing Board at a meeting on April 12 of this year stated, regarding the lack of insurance coverage: Even the $1 million in coverage is nothing in the event of a catastrophic injury. If I had the

power, I would order you, all parties, to sit down and negotiate this

until it was settled.

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Imagine a commissioner of a horse racing State not having the

power to do what is absolutely right and moral with regard to jockeys and exercise riders.

One of the racetrack associations is TRA. Its executive director

is Chris Scherf. I saw him in the audience earlier today. In an article in bloodhorse.com on March 14, 2001, in response to the Guild

losing its family health insurance, he said, we’re not responsible for

paying the health insurance for independent contractors. The jockeys are not hired by the tracks; they are hired by the horsemen.

We have always said we are not responsible for the Guild’s

health costs but in fact the health costs are what have driven the

Guild’s side of negotiation. We’re always arguing over whether or

not we’re paying for health plans or not.

On basic issues involving the jockeys, things like allowing jockeys

to wear advertising on their pants so that they can raise additional

money for the disabled jockeys endowment which will help to permanently create a financial function that can put money into the

pockets of disabled riders, we have fought tooth and nail to the

point where, in Kentucky, the Racing Commission changed the rule

because they lost to a Federal lawsuit on this very issue 2 years

ago at the Kentucky Derby.

Other participants in the industry such as trainers, some of them

are good, some of them are not so good, some of them are interested in jockey causes, others are not. But I’d like to read you a

quote in an article published on July 28, 2005, entitled Jockeys

Make a Stand by Dave Fairbanks regarding consecutive days of excessive heat at Colonial Downs in which Emanuel Sanchez died

this year from heat exhaustion.

Ferris Allen, horse trainer, said we could not have run—we

would not have run our horses if we thought the heat was excessive. There’s no question it was hot, but the risk to horses is when

you get a change in temperature, not when it’s been consistently

hot for a few days.

Complete and total disregard for the jockey. Of course he’s going

to say that if it’s dangerous for the horses then I’m the most sympathetic person in the world, but when it’s dangerous for the jockey, it just doesn’t matter.

Thank you.

[The prepared statement of Albert Fiss follows:]

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Mr. WHITFIELD. Thank you, Mr. Fiss.

Mr. Ownbey, you’re recognize for 5 minutes.

TESTIMONY OF LLOYD OWNBEY

Mr. OWNBEY. Thank you very much, Mr. Whitfield.

I’ve been general counsel——

Mr. WHITFIELD. Would you turn the microphone on.

Mr. OWNBEY. I have been general counsel to the Jockeys’ Guild

since June 2001. In that capacity, I’ve had the opportunity to develop various opinions about the industry.

No. 1, jockeys have not been physically or economically protected

against unsafe, unhealthful and unnecessary risks that permeate

the industry.

No. 2, acting alone, the Guild lacks sufficient resources or power

to effectively deal with those conditions. No. 3, the gambling industry has received over $26 billion in

horse racing revenues and are amassing fortunes using jockey talents, the use of which is inadequately compensated.

No. 4, owners and operator of racetracks have the power, the

ability and the resources to deal with these problems but haven’t

done so.

Five, the Guild presented detailed, specific proposals 3 years ago

to the TRA. It has failed to act on any single health or safety issue

in 3 years.

No. 6, the Guild made similar proposals to all of the State regulatory bodies. Some progress has been made, but the progress is

slow and spotty, while jockeys continue to be killed and disabled

performing their craft. The State of California just put in a new

law that they’re going to be studying the problem.

Whether the States or Federal Government decides to deal with

these problems, the analysis of the action to be taken should follow

these logical steps:

Step No. 1, expeditiously identify the specific risk that exists at

every racetrack in the country. We have frequently expressed that

the Guild is prepared to identify those major problems to staff on

this committee or the committee itself anywhere in this country,

and those services are available today or any day forward.

Step No. 3, determine which policies, procedures, regulations and

laws that need to be changed or added and that that action takes

place now.

Step No. 4, establish industry-wide zero tolerance for unsafe,

unhealthful and unnecessary risks to jockeys and other riders on

tracks.

No. 5, provide jockeys who are temporarily or permanently disabled immediate quality medical care and long-term financial assistance.

Step No. 6, provide adequate funding for those needs.

I urge the committee to take the following three separate actions:

The first one is to establish a mechanism for a Statewide set of

basic safety and health standards to apply to all who participate

in this sport and their State regulators. We need some sort of a

hand from the Federal Government in some way to urge it as they

did in OSHA. OSHA, they put in minimum standards, and then

the States followed and put in their place other standards.

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Provide uniformed minimal standards of workers compensation

covering all of the track injuries administered under the State system. That is to say, we need to have a uniformed system so it

doesn’t depend on which track you’re riding on how much comp you

get. But let the States manage that particular thing.

Now, third and final, how do we pay for it? Require that a percentage of all on-track or off-track wagers made on any track in the

United States be set aside in a fund to pay for the costs associated

with implementing a complete safety and health program for the

sport of kings.

Thank you very much.

[The prepared statement of Lloyd Ownbey follows:]

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Mr. WHITFIELD. Mr. Ownbey, thank you.

Thank you all for your testimony.

I might just make this comment about the racing industry. As

I stated earlier, we do have a fragmented industry. We have different jurisdictions with different rules, and there is a lack of uniformity. In most nations of the world where there is organized racing there is some national standard. I appreciate you all raising

those issues, and that’s definitely something we want to look into.

I want to ask Mr. Fiss one question to start with. I did look at

the testimony that you had provided, that you had written a letter

at some point to Mr. Tim Smith when he was the president of the

National Thoroughbred Racing Association, and you had suggested

the idea of a national workers comp program for jockeys. Did Mr.

Smith ever respond to you, to that letter?

Mr. FISS. No, sir. In fact, just to inform the committee, on two

separate occasions back in the 1990’s the former general counsel of

the Guild tried to engage Congress with national workers compensation programs, first in 1993 and then second in 1997. Both

times it was rejected.

If you’d like copies of those documents, I can produce them right

now.

Mr. WHITFIELD. Well, I would like copies of it.

might add that this is the committee that had the jurisdiction

that passed the Interstate Horse Racing Act which provided the

foundation for the simulcasting. I will say that this committee has

not been involved in the racing industry issues in a long time for

a lot of different reasons, but I do think that things are reaching

the point where we all recognize that there are some needs that

must be addressed. I want to—so I want to assure you that, on the

macro issues of scale of weights, on-track safety, on compensation

for health insurance, all those things, we definitely are going to be

looking into that.

But also I think that we definitely have the responsibility, and

some of the hearing has focused on that today, and that relates to

a fellow like Gary Birzer and his wife Amy whose life has been forever changed because of an accident at Mountaineer Park. And

whoever’s fault it was, I guess it doesn’t make any difference right

now, but the fact is he had paid the dues, he had paid the per

mount fees, and he thought that he had insurance for catastrophic

coverage.

Mr. FISS. The addition to that last comment was he wrongfully

thought. I’m not here putting blame on him. I’m just saying he

wrongfully thought.

Mr. WHITFIELD. Now you heard yourself that three members of

the Board said that they never had a meeting and never voted

upon a decision to allow that policy to lapse for the on-track protection. Do you disagree with those statements made by those three

individuals?

Mr. FISS. They’re answering with poor information. It’s much

more complicated than that.

Mr. WHITFIELD. Let me say that Dr. Gertmenian in his testimony

in the interrogatory in the Keen lawsuit said that the Board of Directors made the decision to allow the policy to lapse.

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Mr. FISS. When I read that testimony, I talked to Dr.

Gertmenian; and I explain to him that he was incorrect in those

comments. He instructed me——

Mr. WHITFIELD. So Dr. Gertmenian made a mistake when he

made that comment in the interrogatory?

Mr. FISS. That’s correct. And I spoke——

Mr. WHITFIELD. Let me talk to Dr. Gertmenian a minute.

Dr. Gertmenian, you’re saying that when you made the comment

that the Board of Directors approved that, that that was incorrect.

Mr. GERTMENIAN. Yes.

Mr. WHITFIELD. Then who did approve the decision not to allow

the policy to lapse?

Mr. GERTMENIAN. I talked to two members of the board, the

chairman and the secretary, Robert Colton. Colton—Mr. Colton had

suggested to me that there was no way that both could be purchased.

Mr. WHITFIELD. What was Mr. Colton’s responsibility at that

time? What was his position at that time?

Mr. GERTMENIAN. He was the secretary of the board.

Mr. WHITFIELD. He was secretary of the board. Who was the

chairman of the board?

Mr. GERTMENIAN. Tomey Jean Swan.

Mr. WHITFIELD. You talked to both of them.

Mr. GERTMENIAN. And Mr. Colton was the one who said there

was no way we could do both. Because I was completely ignorant

of what was going on. I couldn’t possibly have known. It was a very

complex question with the insurance.

So I said, what do you think? And he said, pick one. And the

overwhelming, overwhelming number of jockeys in the country

wanted the off-track health insurance for their families. And I said,

well, you’re going to need the Board to support that; and he said

that would be the case. And it was my understanding, whether I

was misinformed or not, whether I’m misinformed now, but it was

may belief then, it was my belief when I answered the interrogatories, that that Board had, in fact, made that decision. I am

wrong.

Mr. WHITFIELD. Now, Mr. Colton’s still here with us; and he’s

been sworn in. Mr. Colton, would you come up here, over here on

this side. We’d asked about this, and you never mentioned Dr.

Gertmenian talked to you about this. Remember, you’re under oath

as well.

Mr. COLTON. Yes, sir. That’s a total fabrication, Mr. Chairman.

There’s no way that, in terms of me knowing what the financial

shape of the Guild was at that point—I was riding. I had not been

to Kentucky or looked at their financials at any time, nor had any

been provided to me.

Mr. FISS. May I make a comment on that please?

Mr. WHITMAN. Sure.

Mr. FISS. I have a document here created by Mr. Colton sent in

his e-mails to Nancy LaSalla, who is the wife of jockey Jerry

LaSalla in Chicago, which will show you that he not only knew

about it but he was the author of the documentation that was sent

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chasing the family health insurance and that that documentation

specifically states that on-track injuries were not covered.

Mr. WHITFIELD. Let me just make this comment. We had worked

with you all very closely trying to get documents of Board meetings

and everything else and I must say that what was provided to us

was quite sparse. The one thing that I have noticed about the

Guild is whenever someone says something, someone says something else. There seems to be a coordinated effort to confuse everything. Even the notice to the jockeys, I’ve got a whole page here

of five or six different answers to that question.

But let’s just focus on the fact that the policy lapsed and one——

Mr. FISS. Which policy?

Mr. WHITFIELD. Talking about the on-track policy.

Mr. FISS. The one that was purchased for 1 year in April 2001

to April of——

Mr. WHITFIELD. That’s correct—and not renewed.

Mr. Colton, how long had you been with the Jockeys’ Guild at the

time we’re talking about?

Mr. COLTON. I rejoined 1999, 2000.

Mr. WHITFIELD. What was your position?

Mr. COLTON. Originally rejoined as a member and was elected to

the Board of Directors, and I believe in 2000 I was elected to the

executive committee.

Mr. WHITFIELD. You’re sticking by your testimony that the Board

never met nor did they ever vote on allowing the lapse of this policy.

Mr. COLTON. That’s correct, sir.

Mr. WHITFIELD. You’re also testifying that Dr. Gertmenian never

came and talked to you as he testified to just a minute ago.

Mr. COLTON. There had been discussion at the 2001 assembly

about possibly having to do it. They are talking about some health

forms that went out that stated that the contract insurance would

no longer be covered.

Mr. WHITFIELD. That was in the assembly in Austin, Texas?

Mr. COLTON. Correct. At that time, the policy was 4 months from

being canceled. We had faith in Dr. Gertmenian—I should say Dr.

Gertmenian—that they were going to be able to eventually get

this——

Mr. WHITFIELD. One thing that’s come through loud and clear

today is that management of an organization like this is difficult

because you have jockeys scattered all over the country focusing on

riding; and you would think with something so important as insurance for covering a catastrophic injury on the track, recognizing the

danger of the sport, that the Guild that is responsible for keeping

the policy in place would notify the jockeys if the decision had been

made to allow to lapse or that it was not going to be renewed. Because jockey after jockey after jockey has testified in writing to us

and in person today that they knew nothing about it.

Mr. FISS. Again, you’re making the assumption that the Guild

had always purchased on-track accident insurance or some kind of

supplemental coverage above the hundred thousand dollars that

the tracks were purchasing, and that’s just not the case.

Mr. WHITFIELD. Mr. Giovanni, you’re here; would you come up

here?

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How many years were you the head of the Jockeys’ Guild?

Mr. GIOVANNI. I was the national manager for 14 years.

Mr. WHITFIELD. And of those 14 years, how many years did the

Jockeys’ Guild provide on-track and off-track coverage?

Mr. GIOVANNI. Every year. We provided a health insurance plan

that covered the jockeys when they got hurt on track. If they got

hurt on track——

Mr. WHITFIELD. All 14 years?

Mr. GIOVANNI. Yes, sir. When we could no longer afford the health insurance, we bought a $1 million catastrophic plan to put

in place to make sure that the jockeys were covered. That’s what

he’s referring to. We didn’t always have a catastrophic plan; we

had a health plan that picked up and was a catastrophic plan——

Mr. WHITFIELD. You always had them covered on track.

Mr. GIOVANNI. Yes, sir, they were always covered.

Mr. WHITFIELD. And that 1 year you went to the catastrophic

coverage because of unique circumstances——

Mr. BARTON. Mr. Chairman, would you yield?

Mr. WHITFIELD. Yes, sir. Mr. BARTON. What do you mean by a

million dollar policy; it paid out a million dollars? The premium

was a million dollars?

Mr. GIOVANNI. Yes. Covered the jockeys for $1 million, and the premium was $443,000.

Mr. BARTON. If they suffered a catastrophic injury while riding in their profession, they were paid a $1 million——

Mr. GIOVANNI. It was $1 million worth of medical coverage. It

would pay their medical expenses.

Mr. BARTON. It provided $1 million worth of medical coverage.

Mr. GIOVANNI. Yes, sir.

Mr. BARTON. Thank you.

Mr. WHITFIELD. My time is expired. Mr. Stupak.

Mr. STUPAK. Did the Board ever take Board action, a vote, to

allow or not renew the on-track policy, Mr. Fiss?

Mr. FISS. No.

Mr. STUPAK. So it never came before the board?

Mr. FISS. No.

Mr. STUPAK. So it lapsed.

Mr. FISS. Yes.

Mr. STUPAK. Did you notify—did the Board notify the jockeys

that it had lapsed?

Mr. FISS. No, because it was our understanding that, quite frankly, the jockeys didn’t even know it existed. There is no documentation to suggest that they knew it existed.

Mr. STUPAK. The point being there was a policy, it expired, and

no one notified anyone that it expired. Whether they knew or not

knew isn’t relevant to the question.

Mr. FISS. But remember that they were notified in December

2001 that we could no longer afford to purchase that policy.

Mr. STUPAK. And how were they notified?

Mr. FISS. Through the mailing of applications for family health

insurance.

Mr. STUPAK. Is that in Tab 29 of the big book? Is that the health

plan enrollment instructions for the Jockeys’ Guild?

Mr. FISS. I don’t have that in front of me.

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Mr. STUPAK. It’s coming right down to you right now.

Mr. FISS. Yes, that’s correct.

Mr. STUPAK. Where does it say that your plan is about to expire

in this? In the packet it says you have health—right on the top,

enclosed in this packet, Health Plan Enrollment Instructions, welcome to PHCS Member Health Plan 202, health plan benefits,

health plan enrollment, change, coordination of benefits. I don’t see

anything in here that says they’re about to expire.

Mr. FISS. No. The jockeys had always been under the mistaken

impression that the ULLICO plan, the family health insurance

plan that Mr. Giovanni talks about that has been in place for a

number of years, also covered the jockeys for on-track injuries if

they were injured above $100,000 limits.

Mr. STUPAK. Well, the last panel of jockeys here had it pretty

well nailed down, they weren’t mistaken; they understood they had

to make some choices, but all they wanted was some notice when

they were on track one expired, because that is the one that is

going to put them in bankruptcy in a minute.

Mr. FISS. If I could use an analogy; if I buy car insurance, I can’t

use it if I get injured on a motorcycle. The insurance that was purchased was family health insurance, it was not Workers’ Compensation or work-related injury insurance. And the fact that it

was used for that purpose I think is a purpose that the old management of the Guild, quite frankly, is avoiding.

Mr. STUPAK. Well, we started this hearing out with Mr. Birzer

who was tragically injured, and it wasn’t the health insurance he

was worried about, it was his on-track insurance.

Mr. FISS. Yes.

Mr. STUPAK. So you can sit here and blame former management,

but this happened on your watch, not on Mr. Giovanni’s. On your

watch, and therefore the responsibility and the culpability lies with

the current board, not with Mr. Giovanni’s board. That’s my concern here.

Dr. Gertmenian, how did—the last panel said that you were proposed to take over for Mr. Giovanni, it was 5-4 not in favor of replacing Mr. Giovanni. How was it that you were—he was replaced

by you? When you have a Board meeting, isn’t there a beginning

and an end to the Board meeting, or do you have a rolling Board

meeting where people can change their mind and not do it in the

presence of the rest of the board?

Mr. GERTMENIAN. The Board met in executive session.

Mr. STUPAK. Sure. Nine Board members, right?

Mr. GERTMENIAN. Right. Mr. Colton was on the phone with me

at the end, and I think maybe once or twice in between, as a matter of fact, to tell me that they were having their meeting. At that

time he said that they had voted 9-0 to remove John Giovanni. I

said that’s hard to believe because I know at least 2 or 3 members

of that board—the executive committee it was called then—would

probably support him. He said no, it was 9-0. And I said until I

can see it in a fax from at least five of them, I’m not going to buy

in, I’m not going to believe that it’s true until I see it. So in a matter of an hour or so, five such faxes did, in fact, come to my home.

At that point, even if it were not nine—and I believe that it was—

that at least it was a majority.

199

Mr. STUPAK. The testimony we had earlier, there was a Board

meeting, and at the end of that Board meeting it was 5-4 not to

hire you, and then later a fax came in later. Now as the chairman

of a board, isn’t it unusual to have a Board meeting, the Board

meeting ends, and then another document appears? Did you reconvene the board, or was it just——

Mr. GERTMENIAN. No. Let me tell you what I know, and if I don’t

know it all, at least I know what I was told. The Board voted 9-

0 to remove Mr. Giovanni. I said I wanted evidence of that.

Mr. STUPAK. And you had five faxes, I got all of this.

You’re the head of this organization, right? When you hold a

Board meeting, is there a beginning date and an ending date to

that Board meeting?

Mr. GERTMENIAN. There was a beginning time and ending time

on June 15, which was a Friday night.

Mr. STUPAK. Well, even in a Board meeting, if you had one yesterday, is there a beginning date and an ending time?

Mr. GERTMENIAN. Of course.

Mr. STUPAK. Okay. Well, being a professor, and you know all this

stuff about boards and all of that, isn’t it a highly unusual procedure to have a meeting begin and end, and then suddenly faxes

come and suddenly someone else is hired after a Board meeting?

Mr. GERTMENIAN. I felt there was so much consternation, so

much disruption, I said I really need to see this in writing.

Mr. STUPAK. Okay. Let me ask you this question. There has been

a lot of discussion here today about getting your Board minutes.

Can you get them to this committee by next Friday?

Mr. GERTMENIAN. Well, the problem is that Mr. Colton was the

secretary, and for many of those meetings, it turned out, he did not

take the notes. And so we can give you the more recent ones, but

we can’t give you those.

Mr. STUPAK. Well, it’s our understanding you haven’t given us

any.

Mr. GERTMENIAN. Well, I will tell you what we will do, with all

embarrassment on my part, if you have not received those—everything that we have will in fact be sent to you.

Mr. STUPAK. Okay. I want even notice of Board meetings, even

if no minutes were taken, so we know when Board meetings were,

okay?

Mr. GERTMENIAN. Please. We will do the best we can to give you

everything that we have in that regard.

Mr. STUPAK. This Permanent Jockey Endowment is something

your new Board has established?

Mr. GERTMENIAN. If you will allow me to explain.

Mr. STUPAK. Sure. Just so long as you don’t filibuster, I don’t

have much time.

Mr. GERTMENIAN. I believed that the Disabled Jockeys’ Fund was

being paid out at a rate that would eventually bankrupt it. And

that was the term that I used, and the fund that I’ve been talking

about, it wasn’t the Guild, it was the fund.

Mr. STUPAK. Sure.

Mr. GERTMENIAN. In my experience, people were much more willing to give money to a permanent endowment than they were to

a fund that got spent down. That I thought we could raise the

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amount of money required to take care of disabled jockeys, that we

created a permanent endowment, which is what we did.

Mr. STUPAK. So when Mr. Giovanni’s administration ended, there

was, like, $1.3 million in the Disabled Jockeys’ Fund.

Mr. GERTMENIAN. My memory of that is correct.

Mr. STUPAK. And you changed the name, if you will.

Mr. GERTMENIAN. No, we did not change the name. We kept the

fund intact. We created it outside of the Guild.

Mr. STUPAK. This Permanent Jockey Endowment.

Mr. GERTMENIAN. Permanent Jockey Endowment, and asked for

donations to go to the Permanent Disabled Jockeys’ Endowment.

And in some locations around the country, like the State of California, they do now make contributions to that endowment. I also

made a $50,000 donation myself to the endowment.

Mr. STUPAK. Great. What happened to the $1.3 million in the

Disabled Jockey Endowment?

Mr. GERTMENIAN. You were informed by someone at the table before that money was taken from the fund and put into the endowment. I would like to clarify that.

Mr. STUPAK. Okay.

Mr. GERTMENIAN. I did, indeed, suggest to the board, and to the

treasurer specifically, that that would be wise. It was certainly my

suggestion that the money would be much better served going

over——

Mr. STUPAK. Did it go to the endowment fund or not?

Mr. GERTMENIAN. Not a penny.

Mr. STUPAK. Okay. So there should be $1.3 million in the endowment fund, minus any expenditures——

Mr. GERTMENIAN. Hold it a minute, something went wrong. Not

a single penny from the fund ever went to the endowment.

Mr. STUPAK. I know, that’s what you said; I agree with you. So there is $1.3 million when you take over this fund.

Mr. GERTMENIAN. Correct.

Mr. STUPAK. And do you need 2 or 3 Board members to approve

any transfer of funds out of the Disabled Jockey Fund? Who makes

that decision whether to approve and expenditure——

Mr. GERTMENIAN. It would take the whole Board and a meeting.

And they did in fact have a meeting and they did in fact give me

that approval, and we never used the approval because it turned

out that it was not wise for a pretty simple reason actually. The

trustee of the fund wanted us to get a court order for the transfer,

and we simply decided that to pay the $10- or $15,000 for legal fees

to transfer the money just didn’t make sense, so we never did.

Mr. STUPAK. I’m not asking about transferring the money. I’m

saying if I’m a disabled jockey, I have a need, I can apply to this

Disabled Jockey Fund. Under Mr. Giovanni, 2 or 3 Board members

had to agree. If they agreed, they paid the money. Like Mr. Bailey

was one of those people on that fund, he testified. Under your administration, did you follow the same procedure?

Mr. GERTMENIAN. Yes. The committee was continued. The chairman—Tomey-Jean Swan selected the chairman. I purposely and

deliberately never attended meetings, I never approved a payment,

I never suggested a payment. In other words——

Mr. STUPAK. What happened to the funding——

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Mr. GERTMENIAN. I never allowed myself to get involved in that

particular thing because——

Mr. STUPAK. Do you know what happened to the fund?

Mr. GERTMENIAN. They spent it.

Mr. STUPAK. All for disabled jockey needs.

Mr. GERTMENIAN. That’s correct. And the treasurer had to

approve——

Mr. STUPAK. When you bring in those minutes for us, would you

please bring those minutes of this Disabled Jockey Fund too, so we

can see those?

Mr. GERTMENIAN. We will bring you—in fact, I’ve sent to Mr. King all of the checks. All $1.3 million—every single piece of it.

Mr. FISS. If I may, I may be able to clarify a little bit here with

regards to this money that was in the Disabled Jockeys’ Fund. In

December 2001 at the Austin meeting, it was recommended—but

again, I don’t know if any minutes were ever taken to approve it—

but it was recommended that the Disabled Jockeys’ Fund should—

because the general philosophy was that jockeys should not be paying themselves for injuries sustained on the racetracks or anything

associated with injuries sustained on the racetracks, that the fund

could be used not only to pay permanently disabled jockeys and

their medical expenses and their premiums for health insurance,

but also the permanently—the temporarily disabled jockeys that

received money while they were out of work.

And so when you see the accounting of this money, what you will

see is that the money predominantly went to temporarily disabled

jockeys in the form of $100 and $200 checks on a weekly basis.

Mr. STUPAK. So you’re saying under oath that the $1.3 million

didn’t go into the general fund to pay for the general operating expenses?

Mr. FISS. Say that again.

Mr. STUPAK. So you’re saying today, under oath, that the $1.3

Disabled Jockey Fund did not go into the general fund to pay for

the general operating expenses of the Guild?

Mr. FISS. That’s correct. What we did do is we wrote checks out

of the general operating fund for the—because it was a checking

mechanism. The Disabled Jockeys’ Fund never had the ability to

write 40 or 50 or 60 checks a week, so the general operating fund

would write those checks and then get reimbursed by the Disabled

Jockeys’ Fund.

Mr. STUPAK. And that’s what the accounting will show?

Mr. FISS. Yes.

Mr. STUPAK. Thank you, Mr. Chairman.

Mr. WHITFIELD. And you never took money from the Disabled

Jockeys’ Fund to put it into the endowment; is that what you’re

saying?

Mr. FISS. That’s correct.

Mr. WHITFIELD. But you did take deposits that were designated

for the Disabled Jockeys’ Fund and deposit those into the endowment.

Mr. GERTMENIAN. That’s not correct.

Mr. WHITFIELD. Now the reason I’m asking is we talked to Steven Rice, who I believe was your treasurer——

Mr. GERTMENIAN. Yes.

202

Mr. WHITFIELD. And we asked him during an interview about that, and he said that they withheld from depositing $196,000

worth of checks written to the Disabled Jockeys’ Fund and instead

deposited into the Disabled Jockey’s Endowment, and you gave us

a copy of that deposit.

Mr. GERTMENIAN. So I’m misinformed, sir, and I’m sorry.

Mr. WHITFIELD. I recognize the Chairman of the full committee.

Chairman BARTON. Thank you, Mr. Chairman.

Dr. Gertmenian, I understand that you’re testifying voluntarily;

is that correct?

Mr. GERTMENIAN. Yes, sir.

Chairman BARTON. And I understand also that you stood up and

raised your right hand and swore to tell the truth, the whole truth,

and nothing but the truth; is that correct?

Mr. GERTMENIAN. Yes.

Chairman BARTON. So you’re going to try to answer my questions

honestly.

Mr. GERTMENIAN. Of course.

Chairman BARTON. All right. Is there a catastrophic health care

policy in existence today for members of the Jockeys’ Guild who are

paying their dues on a sufficient basis to be members in good

standing, yes or no?

Mr. GERTMENIAN. No, unless you are in one of four States.

Chairman BARTON. All right. And it’s my understanding that Mr.

Fiss and some other people here testified earlier that, however that

happened, it definitely happened once you assumed your duties

managing the Guild; and it’s your contention or your association’s

contention, with the notification was this document where you sent

out a solicitation for members to join a generic health care plan

that would cover themselves and their family for non-track-related

injuries; is that correct?

Mr. GERTMENIAN. Yes.

Chairman BARTON. All right. Do you think that that stands up

as an adequate notification, that a generic mailing is sufficient notice to tell members that they no longer have this catastrophic coverage? It doesn’t meet any requirement of notification that I’m

aware of, but you think it does.

Mr. GERTMENIAN. The attention being paid to the issue of offtrack insurance for their families——

Chairman BARTON. Well, I’ve got the document, it’s before us.

And page 1 simply says if you want to sign up, here’s what it costs

and here’s what the premiums are. And on page 2, on the back, it

does say that this plan doesn’t cover non-catastrophic injuries. And

then three bullets down it says the Guild can’t afford it, the million

dollar policy. So that’s one bullet on a two-page form on the back

of the form.

And we have witness after witness that’s testified to the staff

and to answer questions today that they were under—they thought

they were still being covered until we had an injury in which it was

proven that they weren’t covered.

Now, for whatever reason you’ve been—you’re the man in charge

for the last 3 or 4 years—why in the heck don’t we have a policy

in effect today, once we found out we don’t? Why haven’t you done

that?

203

Mr. GERTMENIAN. We have no money to pay for that.

Chairman BARTON. You can’t go out—now you’re getting $2 million a year.

Mr. GERTMENIAN. No, we’re not.

Chairman BARTON. Well, then everybody else is lying.

Mr. GERTMENIAN. Okay. But we’re not getting $2 million a year.

You mean from all sources?

Chairman BARTON. Well, why wouldn’t you, as the man in

charge, if the No. 1 thing that most of these people think their dues

are going for—at least one of the most important things—is to provide them a catastrophic coverage in case they’re injured while

they’re doing their profession, why wouldn’t you make it the No. 1

priority to raise the money to get that coverage in effect? You have

done nothing. You’ve done not a darn thing except delay and go as

far as you could go not to obey the subpoenas of this committee.

Mr. GERTMENIAN. Sir, we were pressured in every track that I

went to with the same story: You must get us off-track health insurance for our families. That was the No. 1 concern.

Chairman BARTON. So why haven’t you done it?

Mr. GERTMENIAN. We did it.

Chairman BARTON. It’s not in effect today.

Mr. GERTMENIAN. Yes, it is. The off-track is in effect today. We

did exactly what they asked us to do. It was the overwhelming

comment in every track I went to, and we did it.

Chairman BARTON. So you’re saying you have off-track, if they’re

in a car accident, but if they’re injured on the track it’s every man

for himself. And they accept that. In spite of everything we’ve

heard, that’s—if we polled jockey membership, that’s what they

would say——

Mr. GERTMENIAN. If they get cancer or they’re pregnant or that

kind of an issue, then that’s taken care of.

Chairman BARTON. Well, that’s what this plan that you sent out

the form for is all about;that’s generic health insurance.

Mr. GERTMENIAN. But most of them, we were told, could not get

it on their own because of their physical state.

Chairman BARTON. Well, I just find that very difficult to believe.

But I just want to switch to something else, switch to page—the

Tab here that talks about your resume. I think it’s Tab 58. Do you

have that before you? In my binder, in my folder it’s Tab 58. Have

you got that?

Mr. GERTMENIAN. Yes, sir.

Chairman BARTON. Now I’m going to read a sentence, and you

tell me whether this is directly from your resume or if this is a

staff—committee staff summary:

Dr. Gertmenian served the Nixon and Ford administrations as

the chief detente negotiator in Moscow for the Chairman of the National Security Council, as an emissary to Tehran for the Secretary

of Commerce, and as a special assistant to the Secretary of Housing and Urban Development.

To your knowledge is that a true statement?

Mr. GERTMENIAN. Yes, sir.

Chairman BARTON. And that comes from your resume, or that is

your resume.

204

Mr. GERTMENIAN. I don’t know where it came from, but it’s a

true statement.

Chairman BARTON. All right. What would you say if we were to

inform you that we contacted the Nixon Library and the Ford Library, and there is absolutely no record to back that up?

Mr. GERTMENIAN. I have no way to respond. I just know what I

did.

Chairman BARTON. All right. Can you get a notarized statement

from anybody that you worked under that will verify that? We

think it’s a complete fabrication.

Mr. GERTMENIAN. Okay, but it’s not. I was a special assistant;

I’m sure you can find the records on this.

Chairman BARTON. No, I don’t have to find the records. We’ve

contacted the Nixon and Ford Library and they can’t document it.

It’s your name, it comes off your resume, you provide the documents. Who was the Chairman of the National Security Council

that you served under?

Mr. GERTMENIAN. Dr. Kissinger.

Chairman BARTON. Dr. Kissinger. And he’ll send us a letter that

you——

Mr. GERTMENIAN. I doubt it.

Chairman BARTON. You doubt it.

Mr. GERTMENIAN. I don’t know if he will remember.

Chairman BARTON. It says you’re a chief detente negotiator.

Mr. GERTMENIAN. I tried to explain.

Mr. WHITFIELD. Mr. Chairman, may I interrupt just 1 minute?

Mr. Peter Rodman, who is Assistant Secretary of Defense for International Security Affairs today at the Defense Department, who

worked with Henry Kissinger for 20 years, was at the National Security Council from 1969 to 1982 and served on the staff at the National Security Council, served as the Assistant to the President for

National Security Affairs, served as Deputy Assistant to the President for National Security Affairs, and we sent Dr. Gertmenian’s

resume and asked him if he had ever heard of Dr. Gertmenian, and

he said no.

Chairman BARTON. Well, you need to provide—I don’t know if we

need to subpoena this, but you need to provide some documentation

for that if it’s possible.

Mr. GERTMENIAN. Let me——

Chairman BARTON. Because that appears to be a pure fabrication

because we can’t document it.

Mr. GERTMENIAN. In the government documents of the different

jobs, you will find me listed as a special assistant to the Secretary

of the Department of Housing and Urban Development during that

period. And my specific responsibility was the director of the Office

of International Affairs.

Chairman BARTON. Well, you need to document that.

Mr. GERTMENIAN. And in that position I was asked to do exactly

what my resume says.

Chairman BARTON. The next sentence says: Today he is a distinguished professor at two universities in China.

What two universities are those?

Mr. GERTMENIAN. Toufu University and Shandong University.

Chairman BARTON. All right. And can you document that?

205

Mr. GERTMENIAN. I have some certificates in Chinese; I will dig

them out.

Chairman BARTON. Well, we can interpret Chinese.

Mr. GERTMENIAN. I don’t know where they are, but I’ll look at

them. It takes time.

Chairman BARTON. I want to next go to expenses. We asked the

Guild to provide a list of their expenses under your leadership, and

we finally did get a very sparse summary. So these, the numbers

that I’m going to refer to, come from that. But in that expense report we show that a company called Matrix got consulting fees of

$335,000. Who is Matrix?

Mr. GERTMENIAN. It’s a consulting firm that I am the principal

of.

Chairman BARTON. Principal? Are you the only employee?

Mr. GERTMENIAN. I’m the owner.

Chairman BARTON. All right. I’m led to believe that you’re the

only employee; is that correct?

Mr. GERTMENIAN. Well, I don’t get paid, so——

Chairman BARTON. Well, you got $335,000.

Mr. GERTMENIAN. Okay.

Chairman BARTON. Do you accept that that is a number from the

Guild reports—and you do admit that Matrix, you own it.

Mr. GERTMENIAN. Yes, sir.

Chairman BARTON. Now, of that $335,000 that the Guild dues

went to, $46,000 of that went to something called Scoop, Incorporated. Who owns Scoop?

Mr. GERTMENIAN. My daughter Farah.

Chairman BARTON. Your daughter.

Mr. GERTMENIAN. Who was a full-time employee of the Guild——

Chairman BARTON. In addition to that, your daughter got $4,326.

What is Chestnut 140E?

Mr. GERTMENIAN. Rental.

Chairman BARTON. And who owns that?

Mr. GERTMENIAN. My——

Chairman BARTON. Don’t you own that?

Mr. GERTMENIAN. No, sir.

Chairman BARTON. Does your daughter own it?

Mr. GERTMENIAN. No, sir. Her name is Ruth Fascia. She’s the

landlord.

Chairman BARTON. Do you have a lease on that?

Mr. GERTMENIAN. No.

Chairman BARTON. Okay. Fiss Consulting, I assume, is this gentleman right here, who is also associated with the Guild; is that

correct?

Mr. FISS. Correct.

Chairman BARTON. What is Ridgemar Consulting?

Mr. GERTMENIAN. Mr. Martin Cohen.

Chairman BARTON. And what is their association, what did they

do for you?

Mr. GERTMENIAN. Well, whenever these people provided work for

the Guild, in the case of Farah, for example, she worked full time

at the Guild, and only after I had permission from the chairman

to do so, and the board, I presented to the Board can I hire my own

206

daughter, and because she had an MBA and because she was quite

enthusiastic——

Chairman BARTON. I’m not questioning your daughter’s qualifications yet. What I am doing is, you’re hired by the Guild, they pay

you a salary plus expenses, you contract to consult with Matrix for

$335,000—which you own and you’re the only employee that we

can find records of—that $335,000, then, Matrix pays expenses to

Scoop, to Farah Gertmenian, who is your daughter, to an address

for rent that you have—we think maybe you have some controlling

interest in—to a consultant who’s also a Guild employee. When you

add all those up, they total $151,000 of the $335,000, so there is

$183,000 that is unaccounted for. What happened to that money?

Mr. GERTMENIAN. General expenses for the corporation.

Chairman BARTON. General expenses. But you’re the only employee. What general expenses are there? What did you do with it?

There’s no—I mean, it sure looks to me like you got in control of

the Guild, you put all your cronies on the board, you did everything

you can to keep the Guild members in the dark about the lack of

an insurance policy for on-track injuries until it was obvious that

you had to say something. You went out and started these front operations to put even more money in your pocket.

You know, I don’t know if we have any Guild members here, I

don’t know what it takes to make a change in management under

the by-laws—and apparently we’ve had trouble getting the bylaws—but if I were a dues-paying member of the Jockeys’ Guild I

would want new management.

And with that, Mr. Chairman, I’m going to yield back to you. But

this is the beginning of the process. And at a minimum, we want

to see some catastrophic insurance in place as soon as possible for

on-track injuries. And then we want to go from there to start cleaning up this. In my opinion, this is an absolute disgrace to all the

men and women who work in the industry who really try to do the

right thing, who try to do an honest day’s work and to provide entertainment and an experience, a positive experience for the racing

public of America. And with that, I yield back.

Mr. WHITFIELD. At this time I recognize Mr. Walden.

Mr. WALDEN. Thank you very much, Mr. Chairman.

Dr. Gertmenian, I had to step out for a moment, and I know the

Chairman touched on—and that is this Notice of Member Health

Plan, the Jockeys’ Guild. Was this sent to every jockey?

Mr. GERTMENIAN. You would have to ask Mr. Fiss.

Mr. FISS. Yes, it was.

Mr. WALDEN. How was it sent, regular mail?

Mr. FISS. Regular mail.

Mr. WALDEN. Do you think that this—Mr. Fiss, do you believe

that this satisfies whatever requirements might be under ERISA

for notification and change of policy?

Mr. FISS. I am not an ERISA expert, sir, I can’t answer that

question.

Mr. WALDEN. Mr. Ownbey, are you counsel?

Mr. OWNBEY. I provide legal advice when requested.

Mr. WALDEN. Are you familiar with ERISA and the requirements

under ERISA?

Mr. OWNBEY. No, I am not familiar with ERISA.

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Mr. WALDEN. Mr. Fiss, did you seek any counsel to know if you

properly notified under ERISA?

Mr. FISS. No, I did not.

Mr. WALDEN. So now you know whether that’s done right.

Dr. Gertmenian, you run the operation, right? You’re the CEO,

president of the Guild?

Mr. GERTMENIAN. Yes.

Mr. WALDEN. Okay. So you’re the main man. In this notice, I

think the Chairman pointed out it says are on-track injuries covered, and it says they’re not by this new health plan; but it says

the Guild can no longer afford the additional million dollars in coverage.

Now, Mr. Fiss, you earlier were saying how it’s sort of the jockeys’ fault that they didn’t understand their own health plan before,

because it never covered that level of on-track injury, right?

Mr. FISS. I’m not putting the blame on the jockeys, no. If they

were misinformed by the previous management of the Guild that

you could use it for on-track accident, then they were misinformed.

Mr. WALDEN. Then why is it in this statement you say the Guild

can no longer afford the additional million dollars in coverage

under the category ‘‘are on-track injuries covered?’’

Mr. FISS. Because you’re talking about a different policy. You’re

talking about three separate policies. You’re talking about the

original ULLICO plan, which was canceled by the old management

and executive committee of the Board of Directors in March 2001.

Mr. WALDEN. And then they did the annual policy——

Mr. FISS. The excess policy, which covered 457 jockeys at a cost of $969 a year. And let me just give you an example. You had Chris

McCarron here—earlier up here testifying. He was not covered

under that plan. Chris McCarron is a jockey who regularly rides

in the Kentucky Derby——

Mr. WALDEN. Why was he not covered?

Mr. FISS. Because he was a $2 member of the Guild at the time,

which meant that he was not covered under the written documents

of the policy.

Mr. WALDEN. But that’s his choice.

Mr. FISS. But was he informed? Did he know that he was not

covered while he was riding in the Kentucky Derby——

Mr. WALDEN. Well, no, I’m more concerned about what you were

saying earlier, that they were misinformed about were they ever

covered.

Let me go back to Mr. Giovanni. Can you help me on this one?

Mr. GIOVANNI. Yes, sir. It didn’t cover the jockeys who qualified

in California or Delaware because the State was providing

funding——

Mr. WALDEN. Covered by Workers’ Comp.

Mr. GIOVANNI. And they were covered by ULLICO. It made no

sense to pay two premiums for the same coverage.

Mr. FISS. It also didn’t cover jockeys in New Hampshire, Massachusetts. So I don’t know about were those jockeys informed that

they were not covered under the excess policy.

Mr. WALDEN. Can you hold, Mr. Giovanni?

Mr. GIOVANNI. It covered every jockey that needed to be covered

who wasn’t covered for at least a million dollars by some other

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plan. In Massachusetts and New Hampshire there was a plan that

covered them. The idea was, the object was to make sure that

every member was covered. Now, we had to deal with the patchwork, because there were 38 different jurisdictions, as they alluded

to earlier, so it couldn’t be just one plan. The plan we put in place

covered everybody. If it didn’t cover them, then something else was

there in place to take its place to cover them.

Mr. WALDEN. You were there for 14 years, you said?

Mr. GIOVANNI. Yes, sir. I was the national manager for 14 years,

and I was a manager for 6. Twenty years——

Mr. WALDEN. At the time you were there running the organization, was there ever a time when the jockeys weren’t covered for

on-track injuries?

Mr. GIOVANNI. No, sir.

Mr. WALDEN. Or didn’t have the ability to get coverage if they

signed up for it?

Mr. GIOVANNI. Yes, they were covered. Any member who signed

up for it was covered, yes.

Mr. WALDEN. So the only time jockeys weren’t covered by the

plan would have been during this period after you left.

Mr. GIOVANNI. Yes, sir.

Mr. WALDEN. And this plan expired, the million dollar——

Mr. GIOVANNI. When they failed to renew the catastrophic plan,

the million dollar plan, Mr. Fiss I believe wrote a letter to the

President of the TRA, he alluded to him earlier, and——

Mr. WALDEN. What is the TRA?

Mr. GIOVANNI. The Thoroughbred Racing Association. Chris

Scherf—wrote a letter to him and to the general managers of racetracks around the United States, telling the racing associations and

telling the TRA that they were not going to renew this plan. But

they did not afford the members the same courtesy, sir.

Mr. WALDEN. When you changed health plans—I assume that occurred occasionally, or did it?

Mr. GIOVANNI. Yes, it did.

Mr. WALDEN. How did you notify the jockeys?

Mr. GIOVANNI. Mass mailings. And it took a long time. We would

send them a letter following up, and oftentimes jockeys would travel. So it was difficult for us to get to them, so we mass mailed on

more than one occasion. And oftentimes, it happened quite often,

a rider would call and say this insurance plan is no good. I said,

you’re right, it’s been expired. We’ve sent you letters and you

haven’t—but here is your new card. But they were always notified.

And we did follow the ERISA rules and made sure they were notified.

Mr. WALDEN. And how much did this million dollar policy cost?

Mr. GIOVANNI. $443,000.

Mr. WALDEN. Or about what’s being spent on Matrix now?

Mr. FISS. Sir, it was actually done at $969 per——

Mr. WALDEN. And how many participants were there?

Mr. FISS. 457.

Mr. WALDEN. So the amount was?

Mr. FISS. So my question is, what about the other 1,500 licensed

jockeys in the country, why weren’t they covered?

Mr. WALDEN. Did they choose not to sign up for coverage?

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Mr. FISS. No.

Mr. WALDEN. Did they have to choose?

Mr. GIOVANNI. Mr. Walden, if I may, I can cite you some examples, and they’re here in this room. Jerry Bailey rode mainly in

New York. He was covered by Workers’ Compensation. When he

left New York and went to Florida for the winter to ride, he was

covered by the catastrophic plan.

Pat Day rode in Kentucky. He was covered by the catastrophic

plan. When he would go to Saratoga in New York in the summertime, he was covered by Workers’ Compensation.

Chris McCarron rode mainly in California. He was covered by

Workers’ Compensation. When he left California and went to Kentucky or to Florida or wherever he went to ride, he was covered by

the ULLICO plan, which was paid for by the State of California.

There was always something in place to cover these people.

They’re just throwing up a smoke screen here, trying to throw

numbers at you to tell you that the plan only paid for certain people. But everybody was covered either by that plan or another plan

that was in place. They were all covered.

Mr. WALDEN. Okay. Dr. Gertmenian, I believe it was Mr. Colton

who—you were overseeing the fund, right, for the—do I have the

right person there? Who was overseeing the—Mr. Donahue, who

had sought information, financial—and maybe you could come up,

Mr. Donahue, because I’m finding it takes two here to get this

down. You said that you had asked for financial information, an accounting of how the money was being spent out of the Injured Jockeys’ Fund, right?

Mr. DONAHUE. Yes. And what was sent to me was a statement

of how much money on a monthly basis the permanently disabled

riders were getting, and I learned on that same statement they

were paying—tapping into that fund for temporary disabled riders,

which disturbed me greatly.

Mr. WALDEN. All right. And when you were asked for an accounting of that you were denied that, correct?

Mr. DONAHUE. I got it eventually, about 4 months later.

Mr. WALDEN. All right. Why did it take 4 months, Dr.

Gertmenian?

Mr. GERTMENIAN. I don’t know.

Mr. WALDEN. Why don’t you? Don’t you run—did he ask you for

it?

Mr. GERTMENIAN. Not that I remember.

Mr. WALDEN. Mr. Donahue, who did you ask?

Mr. DONAHUE. I asked Albert Fiss and Wayne Gertmenian.

Mr. WALDEN. Mr. Fiss, did he ask you for that information?

Mr. FISS. I do not recall, but I’m not going to sit here and deny

that he did. I suspect that he probably did.

Mr. WALDEN. What is the process today, who has Mr. Donahue’s

position?

Mr. FISS. Actually, we have a committee set up. Two of the members of the committee are here, in fact, Jackie Fires and Rudy

Baez.

Mr. WALDEN. Now when the Board meets, does it keep minutes?

Mr. FISS. Yes, they do.

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Mr. WALDEN. Why can’t you share those with some of the people

that have asked for them? Are they not available to the members

of the Guild, the jockeys?

Mr. FISS. No, that’s not true.

Mr. WALDEN. Are they available to this committee?

Mr. FISS. Yes, of course.

Mr. WALDEN. Have they been supplied?

Mr. FISS. I have not gone through all the supplies.

Mr. WALDEN. Aren’t you the COO?

Mr. FISS. Yes. But the nature of the organization and the limited

amount of money that we get requires that I’m on the road about

20 to 25 days out of every month, so I’m not——

Mr. WALDEN. Dr. Gertmenian, how often are you on the road? Do

you know where the minutes are? You know, the chairman of the

Board didn’t know where the minutes were kept. Do you know

where the records are kept?

Mr. GERTMENIAN. Specifically in the office? The answer is no, I

do not. Are they kept in the office? Yes.

Mr. WALDEN. Okay. They’re on a shelf somewhere in a book?

Mr. GERTMENIAN. I suspect.

Mr. WALDEN. Have you submitted those to us for review? I mean,

a lot of this goes back to—you all know what I’m talking about

here—he said, she said, and the Board does things. And then I

asked the chairman of the Board about it and now Al, we think we

voted on it. I don’t know. Well, is it in the minutes? Yeah, it’s probably in the minutes. I don’t know where the minutes are. We hire

staff to do that. Staff tells me I’m on the road, sorry I’m just COO,

I don’t know.

Mr. GERTMENIAN. Please, Mr. Congressman.

Mr. WALDEN. Yes, Doctor.

Mr. GERTMENIAN. We are so incredibly overwhelmed in terms of

trying to serve their needs. The phones ring 60 hours——

Mr. WALDEN. I can appreciate that even though I’m not in your

shoes.

Mr. GERTMENIAN. Sometimes when people make a request we

have to postpone it, we have to make a decision between answering

the phone to a jockey that just got injured or serving——

Mr. WALDEN. Well, we heard from a jockey that just got injured

who had no coverage when he thought he had it. And he kept calling. He and his wife said nobody would call them back. They said

they tried to call you. You know, you sat here and heard the testimony; all of you did, I think. Did you have time to return their

calls? We hadn’t subpoenaed anything at that point.

Mr. GERTMENIAN. To my knowledge, my wife indeed did call——

Mr. WALDEN. Why your wife? Does she work for the Guild?

Mr. GERTMENIAN. No, but she is contributing her time as so

many other people have. Everybody is trying to help.

Mr. WALDEN. But you’re the CEO, you’re the head.

Mr. GERTMENIAN. I understand.

Mr. WALDEN. How often do you have a quadriplegic——

Mr. GERTMENIAN. I got on an airplane and flew to him immediately, as they told you earlier. And I gave them my bedside telephone number and told Gary and his wife to call me anytime. If

they called my home, there would not have been an answering maVerDate 11-MAY-2000 09:27 Nov 28, 2005 Jkt 000000 PO 00000 Frm 00218 Fmt 6633 Sfmt 6602 24255.TXT HCOM1 PsN: HCOM1
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chine; it would have been live, and I would have heard it and I

would have answered it.

Mr. WALDEN. So tell me what happens when they call the Guild

office? Is there an answering machine when you’re not there?

Mr. GERTMENIAN. Probably 9 out of 10 calls are taken personally,

and only 1 out of 10 when they’re just overwhelmed.

Mr. WALDEN. All right. Help me understand this because I don’t

live in your world. Where is your office located?

Mr. GERTMENIAN. Monrovia on Chestnut.

Mr. WALDEN. And that is the Guild office?

Mr. GERTMENIAN. That is correct.

Mr. WALDEN. And how much time do you spend on a given day

in that office?

Mr. GERTMENIAN. It varies from day to day. I’m probably there

30 to 50 hours a week, it sort of depends. I’m on the road, sometimes I’m working out of my home.

Mr. WALDEN. What about Matrix, how much time do you put in

there?

Mr. GERTMENIAN. Almost none now.

Mr. WALDEN. And you’re the only employee of Matrix?

Mr. GERTMENIAN. Well, I’m not an employee of Matrix.

Mr. WALDEN. Are you an owner of Matrix?

Mr. GERTMENIAN. Owner.

Mr. WALDEN. How many employees are at Matrix?

Mr. GERTMENIAN. There are no employees.

Mr. WALDEN. Where does the money go that goes to Matrix then?

How is it spent and where is its office? Where is the Matrix office,

Dr. Gertmenian?

Mr. GERTMENIAN. It’s in the same location.

Mr. WALDEN. Same location as——

Mr. GERTMENIAN. The Guild.

Mr. WALDEN. I mean, literally the same location?

Mr. GERTMENIAN. Literally.

Mr. WALDEN. Is that correct, Mr. Fiss?

Mr. FISS. Yes.

Mr. WALDEN. Do you have a home office too, then, Dr.

Gertmenian?

Mr. GERTMENIAN. I have a home office, too. We moved the

Guild’s offices into my office is what we did.

Mr. WALDEN. Okay. So the Guild office and the Matrix office are

the same office. Is that the same as your home office?

Mr. GERTMENIAN. No.

Mr. WALDEN. Okay. So you are either in the Matrix office or the

Guild office whenever you’re in either office because it’s the same.

And you’re the owner of Matrix, which has no employees; am I

right?

Mr. GERTMENIAN. Correct.

Mr. WALDEN. Are there any other owners of Matrix?

Mr. GERTMENIAN. No.

Mr. WALDEN. How much goes to Matrix each year? Or last year,

pick a year.

Mr. GERTMENIAN. Somewhere around the numbers you’ve been given, I think $300,000, something like that, maybe 4, I don’t’ know

the exact numbers. They change.

212

Mr. WALDEN. $335,000, I think. So how does that money get

spent, who ends up with the money?

Mr. GERTMENIAN. Some of it is paid out as direct expenses to

people that provide direct services.

Mr. WALDEN. There’s no employees. Do you contract it out?

Mr. GERTMENIAN. Right.

Mr. WALDEN. How many employees——

Mr. GERTMENIAN. It’s a consulting——

Mr. WALDEN. Okay. The committee says that—well, we asked

you for expenses, and it’s up here for Matrix. What is Scoop, Inc.?

Mr. GERTMENIAN. That is my daughter and her consulting company, which she worked full time for the Guild.

Mr. WALDEN. Doing what?

Mr. GERTMENIAN. Worked in the office answering phones and

doing whatever she could to help. She had an MBA, she has her

MBA, she worked in the industry for 2 years, and I asked for permission of the chairman of the Board and of the committee to hire

her and pay her through Matrix, and they agreed to that.

Mr. WALDEN. And in the minutes it will show approval to hire

her to work for the board?

Mr. GERTMENIAN. I don’t know if those were—I think that was

during the time when the minutes weren’t being kept.

Mr. WALDEN. I thought you said the minutes were kept. I’ve been

told there were minutes kept at every meeting——

Mr. GERTMENIAN. But that was a long time ago.

Mr. WALDEN. This shows expenses 2004—oh, you mean when the

decision was made. So long ago couldn’t be more than 4 years ago

because——

Mr. GERTMENIAN. I don’t know if there is any minutes for that,

Mr. Congressman; I really don’t know.

Mr. WALDEN. This would have occurred after the new management team was hired, right?

Mr. GERTMENIAN. Yes. I’m sure that if you asked the chairman

of the board, Tomey-Jean Swan, and any member that was there

will tell you that I asked for permission before I did it, and they

were quite satisfied with her service.

Mr. WALDEN. But did they approve it?

Mr. GERTMENIAN. Oh, absolutely.

Mr. WALDEN. Wouldn’t it make sense, I mean, you’re a professor;

I mean, I didn’t do that well in economics, I confess, and I have

my degree—not in economics, but you must teach sort of basic business. Your daughter is an MBA, right?

Mr. GERTMENIAN. Uh-hum.

Mr. WALDEN. I mean, I’ve been on some small boards. I mean,

you do minutes, there is no question about keeping minutes every

meeting, especially a transaction that involved a related party. My

time is expired.

Mr. WHITFIELD. Mr. Walden, thank you very much.

At this time I recognize Ms. Blackburn.

Mrs. BLACKBURN. Thank you, Mr. Chairman.

I am beginning to feel like this is part of a Dr. Seuss novel in

which we talk about events that never happened in a town that

doesn’t exist. And I am very, very sorry that we are having to go

213

through this today, that this has occurred, and that the individuals

feel their lives are greatly impacted by this.

Dr. Gertmenian, are you on staff at Pepperdine?

Mr. GERTMENIAN. Yes.

Mrs. BLACKBURN. You are on staff at Pepperdine. Okay.

Pepperdine University. Do you believe in the university? Do you

believe in the university? Do you follow its mission statement?

Mr. GERTMENIAN. Of course.

Mrs. BLACKBURN. Good. I’m going to read from the mission statement and I would like for you to respond, please sir, if you do not

mind. I know it’s a fine institution, I have a niece that attended

that institution, so I’m familiar with it. I’m familiar with the mission of that university.

I’m going to just take part of it. In the Pepperdine mission statement it says that the student, as a person of infinite dignity, is the

heart of the educational enterprise. And I want to paraphrase a little bit of this with you, sir.

Would you agree with that statement, that the student, as a person of infinite dignity, is the heart of the educational enterprise?

Do you believe that to be true?

Mr. GERTMENIAN. Yes.

Mrs. BLACKBURN. Then if we were to rewrite that for the racing

industry, would you agree with this statement, sir ?That a jockey,

as a person of infinite dignity, is at the heart of the racing profession? Do you agree with that statement?

Mr. GERTMENIAN. Yes.

Mrs. BLACKBURN. Do you feel like that your actions have carried

that out?

Mr. GERTMENIAN. Yes.

Mrs. BLACKBURN. You do. So you’re proud of your actions?

Mr. GERTMENIAN. Yes.

Mrs. BLACKBURN. And you are proud of the way that you have

represented the Jockeys’ Guild?

Mr. GERTMENIAN. Yes.

Mrs. BLACKBURN. And you feel like you can account for every

penny of that nearly half million dollars that you and Matrix have

seen from the Jockeys’ Guild each year? Yes or no? Yes or no, sir?

Simple answer, my time is rolling, the clock is going, I would like

an answer.

Mr. GERTMENIAN. I can’t answer that yes or no.

Mrs. BLACKBURN. Oh, you can’t answer that. So you don’t know

if you’re proud.

Okay, let’s go on. That the quality of the student life is a valid

concern of the university; do you agree with that statement?

Mr. GERTMENIAN. Yes.

Mrs. BLACKBURN. Then can we say that the quality of the jockey

life is a valid concern of the Jockeys’ Guild; would you agree with

that statement?

Mr. GERTMENIAN. Yes.

Mrs. BLACKBURN. Do you feel like your actions have represented

you well on behalf of the jockeys?

Mr. GERTMENIAN. Yes.

Mrs. BLACKBURN. You do, okay. Continuing. The spiritual continual commitment, tolerating no excuse for mediocrity, demands

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the highest standards for academic excellence; do you agree with

that?

Mr. GERTMENIAN. Yes.

Mrs. BLACKBURN. Okay. Then knowing that you’re committed to

this university, that spiritual commitment, tolerating no excuse for

mediocrity, demands the highest individual standards for accountability, would you agree with that?

Mr. GERTMENIAN. Yes.

Mrs. BLACKBURN. Okay. So then you are proud of the way you’ve

conducted?

Mr. GERTMENIAN. Yes.

Mrs. BLACKBURN. Dr. Gertmenian, I’m going to tell you what.

You have been paid a lot of money to come in here—or to represent

those folks, and then what I have heard you say countless times

today—I have lost count—was that people wrongfully thought, that

they were misinformed, or you were misinformed, or somebody misunderstood, or you guess you just didn’t know. And sir, I will tell

you what; we don’t have hearings like this unless it gets to the

point that the industry is not tending to itself, and then we end

up doing that, and for that I am very, very sorry today, I truly am.

Mr. Ownbey, if I could come to you please, sir. Going to your

written testimony, page 1 of this testimony, third paragraph about

halfway down: As a reasonable precaution, the Guild’s Board of Directors in June 2001 terminated all of the staff and the Matrix

team secured access to the Guild’s Office.

Would you please define for me who was the Matrix team at that

point in time?

Mr. OWNBEY. Those would have been independent contractors

that worked with Dr. Gertmenian.

Mrs. BLACKBURN. Would you please list those for me?

Mr. OWNBEY. I wasn’t there, I don’t know who they were. Albert

was one of them, I know.

Mrs. BLACKBURN. Who was one of them?

Mr. OWNBEY. Albert Fiss.

Mrs. BLACKBURN. Okay. Mr. Fiss was one. Who else comprised

the Matrix team that secured access to the Guild’s office in 2001?

Dr. Gertmenian, could you please answer? Mr. Fiss?

Mr. FISS. Nick Chuvakin.

Mrs. BLACKBURN. Okay. Now, we seem to have lost track of

where all this money went, and Mr. Giovanni said that Arthur Anderson had conducted the accounting of all of the—the audit each

year. Did you all take control of those records at that point in time?

Mr. FISS. No, because Arthur Anderson would not hand them

over.

Mrs. BLACKBURN. Okay. All righty. So you didn’t know what the

audit had shown and Arthur Anderson would not give you all the

audit and so you have no record of that; is that what you’re telling

us?

Mr. FISS. It’s our understanding that the documents were destroyed by Arthur Anderson.

Mrs. BLACKBURN. That they were destroyed.

Mr. GERTMENIAN. Yeah. We filed a lawsuit against Arthur Anderson because they would not turn over the records to us, and

that lawsuit was settled by them—of course, by that time they

215

were out of business and bankrupt, and the insurance sent us a

check for $20,000. We couldn’t get——

Mrs. BLACKBURN. Okay. I’m going to move on with this.

Okay. Continuing in this same paragraph, Mr. Ownbey, the long

and short of it, the new leadership had to assume the current work

while at the same time reconstructing the accounting system.

Why don’t you describe to me the old and new accounting system, since the old one didn’t work? It says that it hadn’t been successfully operated and the records and the books were in bad

shape. So why don’t you tell me about the accounting system?

What was the old one and what was the new one and who was in

charge of it?

Mr. OWNBEY. Well, let me start out and say that my knowledge

in the accounting field is limited, and this is a summary of information I obtained from others.

Mrs. BLACKBURN. From who, who were the others?

Mr. OWNBEY. Well, it would be Albert, Wayne and Steven Rice.

Mrs. BLACKBURN. Okay. So we would need to contact them for

information on why the accounting system didn’t work.

Let me move on. Those offices were moved from Kentucky to

California. Who decided to do that and how much did it cost to

move those offices? Do we know that?

Mr. OWNBEY. I did not make the decision to move to California.

That was made, I assume, by the Board of Directors of the Guild.

Mrs. BLACKBURN. Mr. Fiss, was it made by the board?

Mr. FISS. It was approved by the board.

Mrs. BLACKBURN. And do we have records of that Board meeting?

Mr. FISS. I do not know.

Mrs. BLACKBURN. Okay. All right.

Mr. FISS. I do know that I spent 2 days in a U-Haul, hauling

part of the office from Kentucky to Los Angeles.

Mrs. BLACKBURN. And continuing, Mr. Ownbey, in your testimony you say that the CFO, a gentleman—I cannot pronounce his

last name, is it Gevork Asatryan? Okay—has a huge workload

without the assistance of a full-charge bookkeeper, and he is overworked and there are only two administrative staff members and

they have an incredible workload.

Well, what I can’t figure out is if between you’ve got Matrix get- ting 300-and-something, $400,000 a year, why do we not have a

bookkeeper? We’ve got money. It’s amazing; it seems like everybody

says everybody else is making all this money in the racing industry

and everybody wants to pass the buck to somebody else, and Dr.

Gertmenian is making nearly a half million dollars a year, and the

jockeys have no insurance and they thought they had insurance.

And we’ve got a million dollars that I still am not certain that you

all know what happened with the money when it was moved from

the Disabled Jockey Fund into the general accounting fund—general accounting of the company. So why do we not have——

Mr. OWNBEY. Why don’t we stop right there because you’re misstating the facts.

What I understand to be the case, which is supported by the

checks that went out of the Disabled Jockeys’ Fund, is that all

those checks were made payable to jockeys who were disabled pursuant to a trust fund that——

216

Mrs. BLACKBURN. Sir, that is not the question I asked. I asked

why do we not have a full time bookkeeper if that is something

that is needed. Why do we not have a bookkeeper who is looking

over the books?

Mr. OWNBEY. I am just describing what I understood to the be

facts. But I just wanted to go on record, once again, that that was

not—the million dollars, or whatever amount of money it is floating

around here that just automatically disappeared, that is not the

case.

Mrs. BLACKBURN. Thank you, Mr. Chairman. And I yield back.

Mr. WHITFIELD. Thank you, Ms. Blackburn.

And Mr. Colton, there has been this discussion about the Disabled Jockeys’ Fund being used to provide payments to stabled

jockeys at particular times as they needed it. But it was my understanding at that one time the Disabled Jockeys’ Fund, a check

would be sent directly to the jockey, but since Dr. Gertmenian and

his team took over, that at some point they started making the

checks payable to the general operations fund of the Jockeys’ Guild,

and then the Jockeys’ Guild would write the check; is that correct

or is that incorrect?

Mr. FISS. No. It’s incorrect in the timing. The checks were written first, and then a reimbursement was made. But since—for the

past 2 years, the checks have been just written directly out of the

Guild operating account.

Mr. WHITFIELD. All right. I’m going to come back to this, but I

did see Mr. Burgess and he hasn’t had an opportunity to ask questions. So, Dr. Burgess, you are recognized for 10 minutes.

Mr. BURGESS. I thank the Chairman. Again, you are being unduly kind.

I hardly know where to start. In fact, let me even back up a

panel and ask Mr. Giovanni, since he’s still here, are you familiar

with the group called the Delaware Jockeys’ Health Fund?

Mr. COLTON. Are you addressing John or myself?

Mr. BURGESS. Yes.

Mr. COLTON. Yes, I am, sir.

Mr. BURGESS. And during your tenure your relationship with

them was good?

Mr. COLTON. The Disabled Jockeys’ Fund was money that the

Guild lobbied for that set out a slot revenue in addition to purse

revenue to take care of—not disabled jockeys, but just jockeys in

Delaware. You ride 50 mounts, you become eligible. So yes, I’m

fully aware of this program.

Mr. BURGESS. And Mr. Giovanni, you’re familiar with them as

well?

Mr. GIOVANNI. Yes, sir.

Mr. BURGESS. Would you describe it as a good relationship you

had with them?

Mr. GIOVANNI. We had a very good relationship. We used to give

them an audited statement every 6 months.

Mr. BURGESS. Is that still a good relationship, to your knowledge?

Mr. GIOVANNI. I don’t think so, no. I think there has been some

problems in regard to accounting.

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Mr. BURGESS. Were they ever late on making payments under

your tenure?

Mr. GIOVANNI. No, sir.

Mr. BURGESS. We have, I guess, as part of our work that we have

been given today, just the concerns of the Delaware Jockeys’

Health Fund; and I am not going to read them all, because there

is too many of them. But I guess some of the things that stand out,

that you were running an unregulated health plan, ineligible individuals, nonpayment, drop of track coverage for permanent disability, failure to properly return members’ money, and then the

last, fraudulent retirement accounts. Those are all fairly serious

charges.

Dr. Gertmenian, are you aware of these concerns the Delaware

Jockeys’ Fund had with the Guild?

Mr. GERTMENIAN. Not directly.

Mr. BURGESS. May I ask why not? We had a good partnership

at one point, and they have got concerns here that strike me as

rather severe.

Mr. FISS. Can I answer that?

Mr. BURGESS. Please, I wish someone would.

Mr. FISS. All right. Their concern is a concern due to the lack of

a contractual agreement between the Jockeys’ Guild and the Delaware Board, and the fact that there is no agreement between the

Jockeys’ Guild and the Delaware Board keeps me from advancing

money on health insurance payments for jockeys without knowing

that I am going to get that money reimbursed from the Delaware

jockey account.

Mr. BURGESS. We might come back to that, but I want to be careful about my time. I don’t know if it was asked when I was out of

the room, but if it was, I apologize. But it has been a long day, so

it won’t hurt to cover some of these things twice.

Dr. Gertmenian, the company described as Matrix, have we been

provided with the tax filings from this company to Matrix, I presume? Let me ask you, is it an incorporation, a Subchapter S, an

LLC? What kind of company is this?

Mr. GERTMENIAN. A corporation.

Mr. BURGESS. Okay. And I have just been handed the tax returns, so we apparently do have those.

A significant amount of money seemed to flow through that. Mr.

Walden was asking the question about how that money was disbursed; and, to the best of my recollection, the answer that you

gave was a non-response. Is that your answer and you are sticking

with it? Or is there a place—was there, in fact, a money trail? Was

that money disbursed to an individual?

Mr. GERTMENIAN. About a third of it was paid to people that

worked—whose service was 100 percent for the Guild. The other

two-thirds were paid for general operating expenses; and, to a

great extent, those people who were paid for those expenses or reimbursement or whatever were serving the Guild.

Mr. BURGESS. I get all that. Are there other clients that Matrix

services?

Mr. GERTMENIAN. Not anymore. Not now.

Mr. BURGESS. Not now. Are there any that in the past that you

would care to remember?

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Mr. GERTMENIAN. Well, we certainly don’t have any clients anymore, except the Guild.

Mr. BURGESS. How long has Matrix been in business, in operation?

Mr. GERTMENIAN. 1982. This has become a complete, passionate

project, sir.

Mr. BURGESS. How long has that been? How long has the Guild

been the only project of Matrix?

Mr. GERTMENIAN. I think since June of——

Mr. BURGESS. Perhaps if you find the answers to those questions

and supply us in writing, because there are some other things that

I want to get to.

Mr. BURGESS. I don’t know if the three of you were in the room

earlier today. We had earlier testimony from Amy and Gary Birzer,

pretty moving testimony, pretty startling testimony; and, you

know, they don’t get a chance to cross-examine, so I thought maybe

I would ask a few of the questions that came up during their testimony and see if I could perhaps get answers for them.

We have the point, Mr. Fiss, where Gary has been placed in

Squirrel Hill; his rehabilitation is ongoing. Amy Birzer says he

tried to call you on several occasions and could not get a call returned. Do you think that was an accurate statement? Do you recall getting calls or voice mail messages from Amy Birzer that you

didn’t find time to return?

Mr. FISS. I think I missed one of her phone calls.

Mr. BURGESS. You missed one phone call. Okay.

When Gary reached you, apparently he asked about, gee, can I

have 4 more weeks of rehab, I am making some good progress here,

and you agreed to take care of that.

Mr. FISS. No, that is not an accurate characterization. I spoke

with the hospital where he was at, the rehab center that he was

at. They told me that, at a minimum, he needed 6 weeks of additional rehab; and, quite frankly, they thought 3 months would be

better. In looking at what we could afford to offer Gary——

Mr. BURGESS. Let me just interrupt you here for a minute. Did

you speak with Joyce Watson from admissions at Squirrel Hill?

Mr. FISS. I don’t recall the name. I recall a person by the name

of Sue.

Mr. BURGESS. In Mrs. Birzer’s testimony she said that you had

asked Gary who you needed to call in admissions to make this next

4 weeks happen, and you were given the name of Joyce Watson

from admissions. Did that conversation take place?

Mr. FISS. It is very possible it did, yes.

Mr. BURGESS. Why would Ms. Watson come into Gary’s room all

smiles saying you agreed that the Guild would pay for him to stay

there and take care of any of his needs? Do you think she fantasized that or made it up?

Mr. FISS. No, I don’t.

Mr. BURGESS. I don’t either.

Mr. FISS. Would you like me to answer the question?

Mr. BURGESS. I would be interested in your answer.

Mr. FISS. Okay. As I was saying, we had about $15,000 that we

had available at the time to help out Gary at that facility. The cost,

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as I recall, for an additional 6 weeks was going to run $30,000.

What I had told——

Mr. BURGESS. Let me interrupt you. I think we have gotten that

point. The reality was—Mrs. Birzer stated it so well. She really

thought she was getting the runaround, to the point where she

said, why won’t you help my husband? I mean, it is a fairly direct

question.

Mr. FISS. The answer was that I was talking to Nancy Kelly over

at the Jockey Club, which provides charitable money for injured

jockeys as well as other injuries and for people in need in the industry.

Mr. BURGESS. No, sir. According to Mrs. Birzer’s sworn testimony, your answer was you were going to use her husband as a

guinea pig to make a statement. Did you say that?

Mr. FISS. Yes, I did.

Mr. BURGESS. I would like to explore that more, but there are

some other things I need to get to.

Mr. FISS. There are only three people that I need to apologize for

that particular statement about.

Mr. BURGESS. I wish you would.

Mr. FISS. Thank you. I already did. Thank you.

Mr. BURGESS. Dr. Gertmenian, your hospital visit or rehabilitation center visit with Gary and his wife, the statement that you

know people in high places from time to time would send them

money, what in the world did you mean by that?

Mr. GERTMENIAN. I am sorry——

Mr. BURGESS. Let me ask you first, did you make the statement

that Mrs. Birzer has testified that he knows people in high places

and from time to time he would be sending me money?

Mr. GERTMENIAN. I do not remember using that phraseology. It

doesn’t sound comfortable to me.

Did I say that I would do what I could to help? Certainly. Did

I tell her that we would from time to time try to send her money

from the Guild whenever we could?

Mr. BURGESS. How much money have you sent?

Mr. GERTMENIAN. I am sorry, I don’t know the total. Mr. Fiss

would know that.

Mr. BURGESS. How much money has been sent from the Guild to

the Birzer family?

Mr. FISS. In terms of dollars?

Mr. BURGESS. Since that comment was made at the Squirrel Hill

Rehabilitation Center.

Mr. FISS. A minimum of $26,000.

Mr. BURGESS. Dr. Gertmenian, let me stay with you just a

minute. The Birzer family seems to have gotten the impression

that you were wanting them to consider filing a lawsuit against the

racetrack. Is that correct?

Mr. GERTMENIAN. Yes.

Mr. BURGESS. Why don’t you file a lawsuit against the racetrack?

You are the Guild. You represent them. Don’t you have a duty—

if the racetrack is negligent in providing kitty litter for the horses

to race on, do you not have a duty to file that lawsuit on their behalf?

220

Mr. GERTMENIAN. That is the very core of our problem. We have

no standing to do it. If the jockeys do it, they will be ruled off that

track, and they will not able to work again. That is our problem.

Mr. BURGESS. You would be doing them a favor if they never

worked on that track again.

Let me just make one last statement. You used the word ‘‘overwhelmed’’ in referring to your business dealings with the Guild,

that you couldn’t keep up, that you were overwhelmed. No, sir, I

will submit you were not overwhelmed. Gary Birzer, he is overwhelmed. Amy Birzer, she is overwhelmed. I spent last weekend

down in New Orleans. Those people are overwhelmed. You, sir, are

only overwhelmed to the extent that you don’t know how to spend

all of the money that you have taken from the Jockeys’ Guild.

I will yield back, Mr. Chairman.

Mr. WHITFIELD. Thank you, Dr. Burgess. I think all of us after

listening to this testimony are quite really—I am not sure frustrated is the right word, but taken aback, really.

I have read so much testimony, Dr. Gertmenian, about a comment you have made to people—and we know that you have your

MBA. We know you have your Ph.D. We know you are well educated. As Mr. Donahue said, Dr. Gertmenian stated to me that,

being higher educated and more intelligent, to simply trust him on

these issues. So a lot of people have trusted you.

Then you have a guy like Mr. Fiss there, who at a time when

a jockey has been paralyzed, with his wife, he comes and says, we

are treating you as a guinea pig.

And then I don’t know what Mr. Ownbey is doing. He is supposed to be the general counsel, and he didn’t even know about

ERISA.

So I would ask the question, do you all have a directors and officers liability policy in effect at the Jockeys’ Guild for liability for

the actions of the officers and directors?

Mr. GERTMENIAN. Yes.

Mr. WHITFIELD. You do. Well, that is good to hear.

Then we think about looking at these jockeys. Many of these

jockeys, some of them are immigrants, some of them come to this

country to pursue a dream, an ambition, a goal, people like Gary

Birzer who loved riding horses, and so they are paying this $100

a year fee and they are paying these per mount fees, hoping, expecting, with the expectation that they are going to be taken care

of.

Now, Dr. Gertmenian, so you are sitting there, and we have been

reading through all of this material, you have got your life insurance premiums being paid for by the Guild. You have got your

health insurance being paid for by the Guild. You have got your

pension that is out there, too.

Mr. GERTMENIAN. I am sorry, sir, I don’t have a pension; and I

don’t have my health insurance paid for by the Guild.

Mr. WHITFIELD. Well, it says life insurance premiums.

Mr. GERTMENIAN. I had the life insurance but not the other two.

Mr. WHITFIELD. Family health premiums——

Mr. FISS. And the $5 million that is in the pension plan is for

the former employees.

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Mr. WHITFIELD. You have a car lease that is being paid for. You have got total compensation, $173,000, and that doesn’t include the

money paid to Matrix, which is another $335,000, and we have already gone over it. Not only that, but the Guild is even paying Matrix for its real estate lease, and you are paying your daughter

through Scoup and you are paying Farrell Gertmenian, you are

paying Chestnut 140. And even after paying that, there is still

$183,000 not accounted for, and that is just last year.

Then, on top of that, you all have dismantled the Disabled Jockeys’ Fund, which was being used to provide payments for disabled

jockeys, and you are saying, well, we are going to establish an endowment fund, but we can’t spend any of that money until we have

$10 million in there.

So now you and all of your friends, you are getting plenty of

money, and the jockeys do not have on-track catastrophic coverage,

and the Disabled Jockeys’ Fund is depleted. So the disabled jockeys

are not receiving any benefit, except what you all decide to pay

them through the operations account at the Guild.

Then the lack of minutes at the directors meetings, the lack of

approvals, the lack of notice—I mean, it really is the height of irresponsibility, and it appears to be a calculated effort to mislead people for personal monetary gain. That is the only way I can walk

away from this hearing.

Now, having said that, I recognize that there are serious issues

out there that should be addressed for the jockeys. Mr. Stupak

mentioned some of them and others, but I will yield to Mr. Stupak.

Mr. STUPAK. Thank you, Mr. Chairman.

Well, we have certainly spent some time today talking about the

Birzers and Gary’s serious industry.

Can anyone tell me how many jockeys suffer catastrophic injuries each year? Can anyone tell me that?

Mr. FISS. How many jockeys? Well, there is no real average—

three, four.

Mr. STUPAK. Okay. And how many permanently disabled riders

are there?

Mr. FISS. That are helped by the Guild? The total is 55. Per year,

one and a half.

Mr. STUPAK. And of those, how many are like Mr. Birzer, with

no help, no insurance coverage? How many are like Mr. Gary

Birzer?

Mr. FISS. I don’t understand the question.

Mr. STUPAK. Well, Mr. Birzer really doesn’t have any coverage

from the Guild, or very limited coverage from the Guild, because

the insurance policy wasn’t there. Do you have other jockeys like

him who have been injured catastrophically and are not covered by

the Guild’s insurance policy?

Mr. FISS. Yes, Remi Gunn, for example, injured at Ellis Park in

August 2003, almost a year before Gary Birzer, in Mr. Whitfield’s

district. She did not have catastrophic accident insurance. She is

currently suing Churchill Downs. That is one example.

Shannon Campbell——

Mr. STUPAK. Did she think she had insurance coverage through

the Guild?

Mr. FISS. No.

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Mr. STUPAK. Did she ever have insurance coverage through the

Guild?

Mr. FISS. Excuse me?

Mr. STUPAK. Did she ever have on-track insurance coverage from

the Guild?

Mr. FISS. I suppose she did. I don’t know what her membership

date is, but I suppose she did, if she was a member of the Guild

during that 2001—April 2001-April 2002 period.

Mr. STUPAK. You believe, don’t you, Mr. Fiss and Dr.

Gertmenian, that jockeys are concerned about catastrophic injuries?

Mr. FISS. Oh, definitely.

Mr. STUPAK. And you believe that jockeys are concerned about

lifetime disability?

Mr. FISS. Absolutely.

Mr. STUPAK. Okay. Dr. Gertmenian——

Mr. FISS. But it is all jockeys, not just the 500 or 600 allowed

to be in the Guild under the old management. It is the 1,300 jockeys that are currently in the Guild that we help recruit. It is the

Hispanic jockeys that were disallowed in the Guild under the previous management.

Mr. STUPAK. Mr. Giovanni, you want to say something?

Mr. GIOVANNI. I resent that. There was nobody that was barred

from the Jockeys’ Guild. I don’t understand what he is talking

about. He is trying to say that I am prejudiced.

Mr. STUPAK. I am trying to let it go because it is not relevant

to the point I am trying to get to.

Dr. Gertmenian, did you tell a reporter or did you tell Amy

Birzer that you would personally provide financial assistance to the

Birzers? There is an article in a——

Mr. GERTMENIAN. Yes, I—no. It is a question of the wording.

Mr. STUPAK. Did you make a representation that if things got

bad, I would personally help them out?

Mr. GERTMENIAN. I said I would do personally what I could to

help.

Mr. STUPAK. Did you do anything for them personally?

Mr. GERTMENIAN. No.

Mr. STUPAK. Did you tell Amy if you do provide her with any personal money, she would have to keep it quiet, that she should not

publicly disclose how much you gave her, however you want to

phrase it?

Mr. GERTMENIAN. I don’t remember saying that.

Mr. STUPAK. Okay, did you state on a radio show, At the Races

and Beyond, that the Guild was taking care of Gary Birzer’s medical bills?

Mr. GERTMENIAN. That is a very absolute and complete statement, so we would have to get everything that I said to make sense

out of that. But I certainly never said that all of their bills were

going to get paid for. Did I say that I thought the Guild was——

Mr. STUPAK. Did you say the Guild was taking care of his medical bills? Let’s leave the word ‘‘all’’ out.

Mr. GERTMENIAN. I have no memory of having said it just that

way: Did I say that the Guild was going to help. I don’t remember

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the reference, and I don’t remember the radio show, but it is certainly said more than once.

Mr. STUPAK. The radio people indicate that you said that.

Mr. GERTMENIAN. Said what?

Mr. STUPAK. That the Guild was taking care of his medical bills.

Mr. Chairman, I will yield back the remainder of my time. There

is not much further we can go. I said my statements earlier, and

I look forward to working with you on this matter.

Mr. WHITFIELD. Thank you, Mr. Stupak.

I would just say as we conclude today that—oh, Mr. Walden.

Just a minute. I am going to yield to Mr. Walden.

Mr. WALDEN. Thank you, Mr. Chairman. I appreciate that. I had

some other information I wanted to pursue.

Mr. Ownbey, I want to follow up. In your September 30 letter to

the committee, you go through and respond to the subpoena. You

are familiar with that letter?

Mr. OWNBEY. Yes.

Mr. WALDEN. It is the one to Mr. Feddo. You go through and you

kind of take each point and then you answer it.

Mr. OWNBEY. Yes.

Mr. WALDEN. You talk about the different things that have been

raised. It was the cover letter to the records that were produced.

So you understand what I am working off of, right?

Mr. OWNBEY. Yes.

Mr. WALDEN. On number 5, it says, ‘‘That the Guild and Dr.

Gertmenian were under investigation for wrongdoing by the Department of Labor, DOL, and States that provided money to be

used for jockeys’ health.’’

Then it says, ‘‘A,’’ and this I assume is your answer to that allegation, ‘‘The DOL made an audit and found no problems and they

did not make a written report, which apparently is its practice.’’

Then, ‘‘B, Delaware and California both investigated complaints

and audited the Guild and both found no problems. They also did

not make a written report, which apparently is their practice as

well.’’

‘‘C, I have not been told the committee sought any confirming informing from those entities.’’

I am just reading what is here.

Can you talk to me about those audits from Delaware, California

and the Department of Labor?

Mr. OWNBEY. Well——

Mr. WALDEN. What did they show?

Mr. OWNBEY. What they did is they came in—I think the Department of Labor was there a couple of days, California has been in

a few times.

Mr. WELDEN. Delaware?

Mr. OWNBEY. Delaware, I believe, also. Is that right, Albert?

Mr. FISS. I don’t think they came physically to the Guild office,

no.

Mr. OWNBEY. No. But they asked information that was given to

them in Delaware, and I think there were hearings in Delaware,

were there not?

Mr. FISS. No.

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Mr. OWNBEY. Well, anyhow, the process was, apparently these

people, if they are dissatisfied, they proceed further. If they are satisfied that we have properly answered their questions and we made

everybody available to them, then they don’t give a report. Now I

don’t know why that is the practice, but that appears to be the

practice.

Mr. WALDEN. But what you are saying in this letter is that the

Guild was audited by Delaware, California and the Department of

Labor.

Mr. OWNBEY. I would expect administrative agencies to do that.

Mr. WALDEN. I understand that. But I am just trying to clarify

what your letter says.

Mr. OWNBEY. That is what it said.

Mr. WALDEN. Okay, that they were audited.

Can you turn to Tab 64 in our book? Because, you see, we followed up with those folks. You will see to Delaware Thoroughbred

Racing Commission. It says, electronic mail from Mr. Tom Feddo

regarding request for information regarding Jockeys’ Guild response to recent Subcommittee on Oversight and Investigations’

subpoena for records and the Guild’s counsel’s response claiming

that Delaware and California both investigated complaints and audited the Guild and both found no problems.

Our request also included whether or not the State of Delaware

since the year 2000 ever itself audited the Guild in respect to the

funds provided, the state of the Guild or in any other respect.

I shared this e-mail transmission with the chairman of the Delaware Thoroughbred Racing Commission, Dr. Bernard Daney, who

also serves as ex-officio member of the Delaware Jockeys’ Health

and Welfare Benefit. He comments as follows: ‘‘as you know, we

have never examined any documents nor have we had any accounting firm or law firm examine any documents of the Guild.’’

That is Delaware. You can read the rest of his comments there.

Tab 65, I believe, is the response that we received from the Department of Labor, from Sheila Greenwood, dated October 17: ‘‘the

Department of Labor has never audited the Jockeys’ Guild, and no

report of an audit has ever been issued. In May 2005 DOL concluded the Guild is not a labor organization for purposes of the

LMRDA because it is composed of independent contractors and

therefore the Jockeys’ Guild is not subject to DOL enforcement.’’

Tab 66—no, I am sorry, Tab 64. Tab 64 is from Richard—I am

sorry, Tabs 63, 64 and 65, Richard Shapiro in the same response.

‘‘Tom, I have checked with our staff. To my personal knowledge,

California Horse Racing Board has never conducted any audit of

the Jockeys’ Guild.’’

Now, Mr. Ownbey, you just testified that audits were done. In

your letter to us, you say audits were done.

Mr. OWNBEY. Well——

Mr. WALDEN. Were audits done or weren’t they?

Mr. OWNBEY. I have been with the California Horse Racing

Board. We have talked about audits. They have wanted to take audits. They have come to the office and spent time. It sounded like

a duck to me.

225

Mr. WALDEN. ‘‘Delaware and California both investigated complaints and audited the Guild and both found no problems.’’ That

is your letter to us.

Mr. OWNBEY. That is my letter.

Mr. WALDEN. Delaware, California and the Department of

Labor——

Mr. OWNBEY. Delaware, I was mistaken.

Mr. WALDEN. What about the Department of Labor?

Mr. OWNBEY. Now, the Department of Labor is an interesting situation. The Department of Labor has been accepting our LM-2 reports since—what—1998 or 1997, before we were a part of it. They

did conduct an audit.

Mr. WALDEN. Can you provide that for the committee?

Mr. OWNBEY. They conducted an audit, but they did not provide

us with any. We have asked for it, and they gave us no response.

Mr. WALDEN. Who did you ask?

Mr. OWNBEY. Whoever was conducting it at the time they left.

I wasn’t the person who asked the question.

Mr. WALDEN. Would your records reflect who you talked to at the

Department of Labor?

Mr. OWNBEY. Well, I wasn’t the individual who talked to the Department of Labor.

Mr. WALDEN. I thought you just said you were.

Mr. OWNBEY. No.

Mr. WALDEN. I am sorry.

Mr. OWNBEY. Let me back up. The Department of Labor has jurisdiction, accepted jurisdiction as long as 1998. They have been accepting LM-2 reports. On one occasion, we were late. They fined us.

We paid the fine. They at some point in time sent people to California that spent time looking at our books. That would seem to

me——

Mr. WALDEN. When did that occur?

Mr. OWNBEY. Was it a year ago?

Mr. WALDEN. Mr. Fiss, Dr. Gertmenian, when were you audited

by the Department of Labor?

Mr. OWNBEY. Somebody came out here. Gevork is the man who

would know that. He is the one who spends time with them.

Mr. WALDEN. Mr. Ownbey, with all due respect—Dr.

Gertmenian——

Mr. GERTMENIAN. I don’t know the date.

Mr. WALDEN. Do you remember them doing it?

Mr. GERTMENIAN. Oh, yes, and twice.

Mr. WALDEN. Twice. And they produced an audit?

Mr. GERTMENIAN. Well, the definition of an audit is my problem.

Mr. WALDEN. All right. Well, let me move on.

Mr. OWNBEY. The point being there they were there. They were

looking at the books. I call that an audit. They do not make a practice of giving it.

Mr. WALDEN. You told us Delaware and California

investigated——

Mr. OWNBEY. I was wrong about Delaware. I was right about

California, and I was right about the Department of Labor.

Mr. WALDEN. Well, that is not what California tells us.

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Mr. GERTMENIAN. In California, the executive director of the

California Horse Racing Board actually made a public statement

which was in fact reported in the publications.

Mr. WALDEN. Do you have copies of these, of their audits?

Mr. GERTMENIAN. I don’t. But I remember——

Mr. WALDEN. Because your counsel is telling us that you were

investigated, you were audited, and there were no problems found.

Mr. GERTMENIAN. That is right.

Mr. OWNBEY. And no paper given. That is the problem.

Mr. GERTMENIAN. But there was a public statement made that

was quoted in the newspaper.

Mr. WALDEN. All right. Let me move on, because I am about out

of time. I want to go to the issue of the Matrix board. Do you have

a Board for Matrix?

Mr. GERTMENIAN. No.

Mr. WALDEN. Is it a C corp or an LLC?

Mr. GERTMENIAN. Yes. Mr. WALDEN. So are you President, Secretary, Treasurer?

Mr. GERTMENIAN. Yes.

Mr. WALDEN . You are everything. Okay. And there are no employees?

Mr. GERTMENIAN. That is correct.

Mr. WALDEN. In your tax—I assume I can talk about this, right?

In the binder is the tax return from 2004 that shows an income for

Matrix of $509,669; and when it talks about business activity, it

lists the business activity as investments and product or service as

investment counseling.

Then on the Federal statement for Matrix Capital Associates,

Inc., it talks about deductions in auto and truck for $36,933; legal

and professional, $245,722. It is Tab 56. There is officer life insurance premiums.

I assume you are familiar with this. Did you sign these tax returns?

Mr. GERTMENIAN. Yes.

Mr. WALDEN. So let’s go back to what Matrix does. What does

Matrix really do?

Mr. GERTMENIAN. Primarily we are now committed to helping

the jockeys.

Mr. WALDEN. What were you committed to do in 2004 when—the

year this tax return was filed?

Mr. GERTMENIAN. Primarily to help the jockeys.

Mr. WALDEN. And what was that help? What did Matrix do to

help the jockeys during that period?

Mr. GERTMENIAN. We conducted nationwide teleconferencing and

committee leadership to identify the problems of jockeys. We wrote

up rather, we think, clear descriptions of these problems. We presented them to various State boards and to the TRA, to the national regulators, to everyone who would listen.

I can tell you, track managers, that the only thing and what I

said to everyone that I talked to about this was, look, here is a list

of problems. Pick some and let’s get started with the improvement.

The TRA’s only——

Mr. WALDEN. Okay, but is that investment counseling?

227

Mr. GERTMENIAN. The only thing they were willing to do was to

agree that the jockeys could have a bulletin board. Everything else

that we listed, they simply said no.

Mr. WALDEN. I understand there are all these problems with the

industry, and I have learned a lot today about those and feel there

are certainly problems.

Mr. GERTMENIAN. Well, you asked me what we did, and we were

primarily concerned with making sure we were clear, Congressman, on what all these problems were.

Mr. WALDEN. Is that all the revenue that came in to Matrix from

the jockeys?

Mr. GERTMENIAN. Most of it.

Mr. WALDEN. ‘‘Most of it’’ being what?

Mr. GERTMENIAN. Most of it is from the jockeys.

Mr. WALDEN. The $509,000?

Mr. GERTMENIAN. It probably was less than that.

Mr. WALDEN. What would the other money come in from?

Mr. GERTMENIAN. Any other project that anybody who works—

like a consultant might pay to the Guild, pay to Matrix.

Mr. WALDEN. Did you have other clients in 2004?

Can he answer that question, Mr. Chairman?

Mr. GERTMENIAN. Yeah, I am just trying—I don’t want to sound

ignorant to you.

Mr. WHITFIELD. He testified that he had no other clients.

Mr. GERTMENIAN. I think that I have misspoken. There were 2

or 3 others that have paid, and they were such—they were so unimportant in terms of my concerns, Mr. Chairman, and I really

wasn’t focusing on that. But when you mentioned the figure 500,

when in fact the payments were less, then clearly there were other

incomes, and I wasn’t focusing on those.

Mr. WALDEN. What about the assets that were placed in service

during 2004 with a class life of 40 years and 12 years? It says on

the tax return, section C, assets placed in service during 2004 tax

year using alternative depreciation system, 12 years, 4 years. Was

there any of that? Maybe not.

You had rental property, right, in Matrix, inside Matrix?

Mr. GERTMENIAN. No.

Mr. WALDEN. No. Maybe I am just reading it wrong.

Mr. WHITFIELD. I thought that the Guild was paying Matrix for

rental property. You testified earlier—what is Chestnut 140?

Mr. GERTMENIAN. We pay rent for the rental property, and the

Guild pays us. So we are the——

Mr. WHITFIELD. So the Guild pays you, and you pay that?

Mr. GERTMENIAN. Correct.

Mr. WHITFIELD. Who owns that property?

Mr. GERTMENIAN. The lady’s name is Ruth Fascia.

Mr. WHITFIELD. Who is Jamie Hall?

Mr. GERTMENIAN. Jamie Hall works at the Guild.

Mr. WHITFIELD. Does she live in one of those apartments?

Mr. GERTMENIAN. The apartment is made available for people

who are coming from out of town, the jockeys.

Mr. WHITFIELD. Is she from out of town?

228

Mr. GERTMENIAN. Well, she came from Kentucky, yes; and sometimes she is there and sometimes she isn’t. Sometimes they will

come in from out of town. They will need a place for them to stay.

Mr. WHITFIELD. But the Guild rents that from Matrix, and

Matrix——

Mr. GERTMENIAN. No, it does not. It rents it directly from the

provider of that.

Mr. WALDEN. There is a line 16 here on deductions of $47,265

for rent that Matrix paid, or at least claimed the deduction. Who

did you pay rent to? Did you pay rent to the Jockeys’ Guild? You

have told us that Matrix was collocated with the Guild, so did you

pay the Jockeys’ Guild the rent? Who got this $47,265?

Mr. GERTMENIAN. Congressman, I am sorry. I really don’t understand that. I signed it.

Mr. WALDEN. Do you have a sub-lease?

Mr. GERTMENIAN. We have no lease.

Mr. WALDEN. This is like the 2004 tax year. This is last year.

You don’t know who you paid rent to out of the company you are

the sole owner of for which you have no employees and you show

$47,000 in rent payments? And you don’t know who you were renting from?

Mr. STUPAK. Mr. Walden, if I may, we wrestled with this, too;

and the only thing we can come up with is it looks like the 47,

whatever you have listed there, was almost $48,000. But the Jockeys’ Guild paid them $96,000, and therefore that big difference is

almost a profit that you are quoting there. The Jockeys’ Guild paid

you rent, $96,000—I’m sorry, an allocation for rent of $96,000?

Mr. GERTMENIAN. Give me a second.

Oh, that is the rent on the Chestnut property. Excuse me. Let’s

just do the math. I didn’t do it. I should have done the math.

Mr. STUPAK. We did. I am not even a professor of economics.

Thanks.

Mr. WALDEN. So let me understand it then. Who pays who rent

then? The Guild? The Guild pays Matrix rent?

Mr. GERTMENIAN. Correct.

Mr. WALDEN. And then you pay the Guild rent? Matrix pays the

Guild?

Mr. GERTMENIAN. The Guild pays Matrix, and Matrix pays the

landlord.

Mr. WALDEN. I see. I see.

Mr. WHITFIELD. But Matrix holds the lease.

Mr. GERTMENIAN. There is no lease.

Mr. WALDEN. I thought I read somewhere there was like up to

a 10-year lease agreement you have for up to $97,000 a year. What

is that for?

Mr. GERTMENIAN. Correct.

Mr. WALDEN. Is that the Guild?

Mr. GERTMENIAN. Please allow me, Mr. Congressman, to explain.

Mr. WALDEN. Sure. Help me out here.

Mr. GERTMENIAN. When we first went aboard to help, we didn’t

see how they could ever afford us or any of the people we were

bringing. We asked them, and we tried to find ways to be creative

so that, in the long run, if we were successful, there would be some

way to compensate all of the people that were going to help.

229

One of the things that was put into place was that, if it all

worked out, that they would sign a 10-year agreement on a building that I would buy and lease back. But after a year or 2, we

agreed, and it could have been 3 years——

Mr. WALDEN. That would have been part of your compensation

package when you came in.

Mr. GERTMENIAN. Yes. After 2 or 3 years we agreed that it was

no longer necessary, and so that piece of the agreement was never

put into place.

Again, the Board and I—I suggested it and the Board accepted

the idea that this was no longer necessary, that we were being adequately compensated. So that end result, that long-term way to

help, was simply not needed nor enforced.

Mr. WALDEN. Okay.

Mr. GERTMENIAN. I think this is the reason people keep talking

about a lease. It is because in the original agreement we had that

in there. It is just that it never was actuated, if you will allow me

to use that word.

Mr. WALDEN. One final question, and that is, because a lot of

this gets back to what happens at the Board level, who do you

charge with keeping the minutes of the Board meetings?

Mr. GERTMENIAN. The Secretary.

Mr. WALDEN. And who is that person?

Mr. GERTMENIAN. Today?

Mr. WALDEN. Who has it been? Is there some multiples?

Mr. GERTMENIAN. Yes. It changes every year.

Mr. WALDEN. It changes every year?

Mr. GERTMENIAN. Whoever they elect.

Mr. WALDEN. So a member of the Board keeps the minutes? Not

a staff person?

Mr. GERTMENIAN. We do assist them when they do teleconferencing. We try to assist them and make sure that somebody from

an official—what do you call it—from a professional note-taking

body helps them.

Mr. WALDEN. Who is that person? Was that person ever your

daughter with the MBA?

Mr. GERTMENIAN. No.

Mr. WALDEN. Okay. So she didn’t keep the minutes. So it

wouldn’t be an employee of the Guild that keeps minutes?

Mr. GERTMENIAN. No.

Mr. WALDEN. Did you have a comment you wanted to make on

this issue?

Mr. COLTON. I was the Secretary.

Mr. WALDEN. Did you keep the minutes then?

Mr. COLTON. For me to try to keep minutes as I am participating

in the meeting and need to speak, there is no way I can do it. I

asked repeatedly to have the meetings mechanically recorded; and,

you know, that was time, effort and money that we didn’t have.

Mr. WALDEN. Mr. Giovanni, how were minutes kept when you

were running it?

Mr. GIOVANNI. We used to record everything, and then we would

have the minutes drafted from the recording.

Mr. WALDEN. That is sort of a standard procedure?

Mr. GIOVANNI. Yes, sir.

230

Mr. WALDEN. Thank you, Mr. Chairman.

Mr. WHITFIELD. Maybe it is better for people not to know what

is going on sometimes.

Anyway, we are going to bring this hearing to a conclusion. We

have a vote on the floor.

It has been quite enlightening, and I dare say I have serious

doubts and do not believe that jockeys today are any better off

under this leadership. All the mechanisms that you all have going

of compensating various people, with minutes not being recorded

accurately, without notices being given, it is pretty discouraging.

But we are going to have another hearing, and we are going to

bring in some other groups. We are going to pursue this matter.

With that, the hearing is adjourned.

[Whereupon, at 5:45 p.m., the subcommittee was adjourned.]

[Additional material submitted for the record follows:]

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Æ